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| Home - Industry Article -
July 09 Issue |
Thriving in a Down Economy – Is SaaS the Silver Bullet
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By Greg Gianforte, CEO and Founder, RightNow Technologies
‘Buy more software’ isn’t something you expect to hear in a tough
economy, but software as a service (SaaS) vendors continue to grow and may be
more resilient than most in a soft economy. As the Wall Street Journal recently
reported, leading SaaS vendors financial performance, ‘signals that makers of
online software may do better during the downturn than traditional software
companies.’
Forrester Research noted in a report titled, “Firms Can Benefit from SaaS in
Times of Economic Uncertainty,” July 2008, “many firms see the value of SaaS
regardless of the economic climate. However, when software buyers are faced with
fears of potential recession, SaaS offers even greater value because it provides
a more flexible way of investing in software.”
Forrester also noted in that same report, “SaaS makes it easier to roll out
software incrementally, meaning that firms can prove the return on investment (ROI)
of their purchase in one department or division before rolling it out to other
divisions or the whole enterprise.”
Basically, in a tight economy, SaaS gives companies a way to deploy software
quickly and confidently, while reducing the risk and burden associated with
traditional approaches. Here are three reasons why I think SaaS could be the
silver bullet for thriving in a down economy.
Rapid Time to Benefit with Quick Deployments
Companies cannot afford high-risk, lengthy IT projects that take a long time to
see results. With SaaS, organizations can quickly deploy new applications or new
features to existing applications and reap the rewards much sooner. For example,
drugstore.com (online retailer of health, beauty and wellness products) decided
they wanted to add live online chat to the web site, Beauty.com before the 2008
holiday shopping season. Using a SaaS Chat solution they were live in just a few
weeks, rather than months or longer with traditional approaches. Beauty.com is
now converting approximately 25 percent of chat sessions into product orders and
during promotional weeks converting much as 40 percent. drugstore.com’s ability
to rapidly deploy new customer service solutions helped boost holiday sales
during a particularly difficult retail season.
Reduce Risk, Increase IT deliveries Burden
Traditionally, on-premise software vendors transfer ownership and most
responsibility from the software company to the customer. With SaaS, the
software company retains the critical responsibility for application deployment,
tuning, management and service delivery. SaaS also consumes much less IT
resources by eliminating software upgrades, much of system administration and
lifecycle management headaches. At Shaklee Corporation, a provider of natural,
environmentally friendly nutrition, personal care and household products, CIO
Ken Harris embraces this concept whole-heartedly. Harris has said he will
leverage new technologies that enabled faster time to market, a reduction in the
amount of infrastructure that needs to be built and maintained, and a reduction
in costs. For him, this means SaaS.
Try, Before You Buy
Another valuable aspect of SaaS is that organizations are able to try, before
they buy. With SaaS, it is possible for software providers to offer production
pilot programs that give clients a low-risk way to try out software. It is much
easier to justify a purchase of software based on actual production results
rather than just a slick suit and PowerPoint presentation. Forrester also noted,
“SaaS makes it easier to roll out software incrementally, meaning that firms can
prove the return on investment (ROI) of their purchase in one department or
division before rolling it out to other divisions or the whole enterprise.”
For business leaders, SaaS simply makes sense, especially in a tough economy.
You get fast business impact, low risk purchasing decisions and lower upfront
costs. These are just some of the reasons why RightNow grew our revenues 25%
last year while expanding margins. Believe it or not, there are companies out
there today that are growing and making money in the current economy.
My best recommendation to organizations is that as you identify areas where you
think technology will help you compete better in this tough market, be sure to
evaluate all your the SaaS options first.
Greg Gianforte is CEO, President, Chairman and Founder of
RightNow Technologies. He has led RightNow from its founding in 1997 to 31
consecutive quarters of revenue growth, 14 consecutive quarters of cash-flow
positive performance and a successful IPO. Greg founded Brightwork, a pioneering
developer of network management applications, in 1986. He is also the author of
“Bootstrapping Your Business: Start And Grow a Successful Company With Almost No
Money” and “Eight to Great: Eight Steps to Delivering an Exceptional Customer
Experience.” Greg was also the Ernst &Young Entrepreneur of the Year (Pacific
Northwest software category) in 2003 and has won the Stevens Honor Award from
Stevens Institute of Technology in 2003. For article feedback, contact Greg at
ggianforte@rightnow.com
 
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