The Rise of Software as a Service

On-Demand Market

The rapid growth of “on-demand” services in the consumer world has helped to spark the rise of Software-as-a-Service (SaaS) solutions in the business environment, producing a new set of opportunities and challenges for software companies.

On the positive side, rising interest in web-based alternatives to traditional on-premise, perpetual license software is fueling demand for a new generation of easy to deploy and more economical subscription services. Businesses are turning to SaaS solutions because of their collaborative capabilities, elasticity and continuous innovations.

However, customer expectations regarding the availability and performance of their SaaS applications are also rising. As users of SaaS solutions become more dependent on their web-based applications, they are also becoming less tolerant of service failures, slow response times and even scheduled downtime for service maintenance.

And, with the barriers to entry in the SaaS market disappearing and customer lock-in a thing of the past, SaaS companies are increasingly at risk of customer abandonment if they don’t continuously satisfy their escalating needs.

SaaS companies must also build highly scalable service delivery infrastructures to handle their rapidly growing customer bases. As these applications become more data-driven, building the SaaS solutions on a highly elastic data architecture is essential. Yet, many SaaS companies can’t afford to make major capital investments in their service delivery systems given the nature of SaaS revenue streams and growing price competition.

Traditional database architectures were not designed to respond to today’s SaaS requirements. They don’t fit in today’s increasingly hybrid world. A new approach to database design is necessary to meet the operational and financial needs of SaaS companies.

In the next few weeks, I’ll be blogging more about this topic and specifically discussing: 

  • Where SaaS companies are failing to deliver on the promise of cloud
  • How the cloud delivery model has created new database performance challenges
  • How a new database architecture can respond to these challenges

Stay tuned next week when I’ll tackle “Today’s ‘On-Demand’ Market Realities” and how they’ve driven the migration to software as a service and cloud delivery models.

This is the first in a multi-part series on “Executing a SaaS Strategy: The Role of the Database.” You’ll see a new post from me every week for the next several weeks on the topic, but if you’d like to access the entire series now, you can download it here

Jeff KaplanJeff Kaplan is the managing director of THINKstrategies, the only strategic consulting firm focused entirely on the business implications of the transition of the technology industry from product-centric to services-driven solutions, including software as a service (SaaS), cloud computing and managed services. Follow Jeff on Twitter @thinkstrategies.

 

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