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A Downside of SaaS [At Least for the Vendor Community]

by Debbie Wilson  |  November 3, 2009  |  2 Comments

I had an interesting client call yesterday that reminds me that the flexibility of a SaaS subscription can work both in favor of the SaaS vendor (hey, you don’t have to have a capital budget for us . . . just a bit of operating funds!) and against them.  (Hmmm [says the buying organization] we really must cut back drastically and hey, are we really getting enough value from that solution?  It’s happening . . . . . .

Category: cost-cutting  software-as-a-service  

Deborah R Wilson
Research Vice President
8 years at Gartner
15 years IT industry

Deborah Wilson, a Gartner research vice president, covers procurement strategies and applications. Her areas of interest include procure-to-pay, e-marketplaces, e-sourcing, spend analysis, services procurement and supply risk assessment. Read Full Bio

Thoughts on A Downside of SaaS [At Least for the Vendor Community]

  1. We certainly saw a lot of this \benefit\ to SaaS for buyers during the height of the credit crunch, but that cycle seems to be mostly over … the weak have perished, and the strong are more confident of their plans (if not of the rate of improvement in the economy itself)

  2. Debbie Wilson says:

    Thanks for your email Jason, and I’ve received comments directly from several others stating the ability to “pull the plug” mid-subscription is a good thing for the buyer – because it means the vendor has an ongoing obligation to deliver value. While I agree with this, the situation I described in the initial blog posting is much more ominous. The procurement department said it was getting plenty of value, and the team was very upset about the SaaS plug getting pulled. Their senior management was refuting the ROI metrics and cutting the budget anyway . . . . . something that CAN happen with SaaS that could not with a license deal. The worst case budget cust scenario in the latter case is that you stop paying maintenance . . .. The fact that this is happening this week also indicates that the economic downturn isn’t over for everyone.

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