Software is eating the world. Yes, you’ve probably heard this before from Marc Andreessen in The Washington Street Journal back in 2011. Since then, Software as a Service (SaaS) has become the primary business model on a global scale. Why has it gained such popularity? And how does our own OpenSaaS model benefit our customers? We’ll show you.
What’s SaaS? Although we assume most of you know by now, it’s an application hosted in the cloud and accessible via the internet. It’s like a rental, where you pay an amount each month. Traditional software, on the other hand, has to be bought and downloaded onto your computer. Aka, pretty old-fashioned ;)
We’re now a few decades past the invention of the computer, the microprocessor, and the modern-day internet, all of which is required to deliver software at a global scale. Software companies are not new; for example, Microsoft and IBM have been around for decades. Even SaaS itself has been around for longer than we think:
“The interesting thing for me,” Nick Port from Zendesk explained, “is SaaS has always been there. It was just called something different. Back then it was a ‘maintenance contract’. It’s really the delivery method that’s the new bit, the cloud aspect, particularly.”
Companies quickly recognized the value of using a subscription model, and SaaS providers began dominating the digital landscape. Let’s take a look at some facts from the 2016 Saas Industry Report.
- 33% of companies are using more SaaS applications than they did in 2016 (with more than 16 apps on average per company!)
- 80% of American end-users prefer SaaS and cloud-hosted apps for communication and organization.
- Four leading tech companies switched to SaaS product development in 2017 (Microsoft, IBM, CA Technologies, and SAP)
- According to the Cisco’s Global Cloud Index, by the end of this year, over 59% of all cloud workflows will be offered as SaaS.
As you can see, nowadays SaaS is not even a question of if anymore, but how. You must be asking, what makes SaaS so attractive for businesses? And how does it benefit you as a SaaS customer? Keep scrolling to find out!
Benefits for you, and you, and you…
SaaS has a variety of benefits for both consumers and companies alike (yay!). Software as a service was not initially interesting to users. However, a few significant changes boosted the SaaS industry: the increase in computing power of personal computers and the evolving HTML standard through which rich applications can run in your browser. We suddenly had the computational power to do and access anything, anywhere. As a result, software subscriptions became a lot more interesting. SaaS offers a lot of incentive and advantages for end users:
You are king: A customer-centric approach has become the trademark of the SaaS industry. According to a recent Zendesk study, delivering functionality in cloud boosted customer satisfaction for almost 28% in 2017. Since these services are centrally hosted, any problem would be reflected in multiple user accounts and will be solved immediately.
You have access anytime, anywhere: SaaS is the path with the least resistance. A study by Korea Advanced Institute of Science and Technology found that convenience and performance accounted for 60% of why end users chose SaaS. The convenience that allows information retrieval and processing at any time and anywhere was recognized as a salient driving force.
You are secure: It’s safer than hosting a licensed software on your own servers. By being online and centralized, better safety systems are applied to the software. Moreover, the software is used by 1000s of other people worldwide enabling better quality. According to Alert Logic's Fall 2012 State of Cloud Security Report, on-premise environments experience 61 attacks per year, while cloud software only experienced 27.
Companies are also turning to SaaS to host their applications in the cloud and it’s not hard to see why. The low costs and ease of use make it easier for companies focus on strategy and customer acquisition/retention. Therefore, the main users of SaaS are unsurprisingly small and medium companies (they also have the best growth forecast for 2018). Here’s why companies are flocking to SaaS:
Affordability: SaaS boils down to some serious financial savings. It eliminates the upfront cost of installing/purchase and the ongoing costs such as maintenance and upgrades. In the end, you only pay for what you actually need (unlike with licensing software).
Security: SaaS will take the security burden off your IT department and transfer it to whoever is paid to maintain it - the application's provider. And SaaS vendors and providers have to undergo strict security audits, meaning they will invest more in security than a typical SMB.
Scalability and integrations: The pay-as-you-go model of SaaS means you have the flexibility to change your usage plan as you grow. It can also be done without advanced notice. Even better, most apps are easily connected to third-party apps and have open API access for custom connections.
As more and more people jump on the SaaS bandwagon, different shapes and forms of the service have begun to take shape. SaaS, IaaS, PaaS - these abbreviations are flying around the internet nowadays. And if you haven’t had enough, we want to add one more: OpenSaaS.
A solution for SaaS’s set back: OpenSaaS
A notable criticism of SaaS, despite its many advantages, came from Richard Stallman from the Free Software Foundation. He argued that SaaS violates the principles that underlie free software, namely that anyone can access, change, and distribute it in any way they like. There is, however, an exception. According to Stallman:
Open source provides the escape hatch. In Drupal Gardens, users [are] able to press a button and get a source code version of the Drupal code that runs their site along with the data from the database. Then, you can take that code [and] do anything that you would like to do.
SaaS does not provide users with a copy of the executable file; they can’t touch it or see it. Therefore, it’s pretty impossible for users to see what it does or change it. Open source code, on the other hand, is openly available to anyone and is a huge accelerator of growth, since it encourages collaborative effort from thousands of developers.
OpenSaaS basically provides customers with the best of both worlds:
- It’s open source so you can build your own platforms with it and customize all you want.
- It’s SaaS, which means you can choose not to manage the platform at all, you can simply pay your software provider.
Open Social prides itself on being an open-source online community software solution, not just because it aligns with our values of community, transparency and collaboration - but also because it makes good business sense.
Being part of the Drupal open-source community make Open Social a unique product with a unique advantage to clients and users. This is because we get to benefit from the skills, expertise, feedback, and ideas of a global community of diverse contributors. Open Social’s technology is driven by the same ideas that we promote in our product:
When a community gets together to collaborate and share knowledge, amazing things happen!
Grow your community with OpenSaaS
Here’s an example of OpenSaaS at its best: at Open Social we offer open community building software. Organizations from various sectors can download or purchase our software to build their own online community while focusing on their primary needs. Volunteer organizations focus on collaboration through groups and discussions, and ideation communities focus on sharing knowledge through our ideation module (for example).
We offer three different packages of our software to ensure that each customer has the flexibility to choose the format that best fits their needs:
Our Distro package is ideal for someone experienced with software and needs the code to build a community. Our SaaS package is great for smaller organizations that need help with setup and maintenance. And lastly, our Enterprise package is the king of customization. You can even choose to host your community with a different on-premise provider if it suits your growing needs.
So why is OpenSaaS the best option for online community software? Feverbee, a large community consultancy agency, created an online community lifecycle that consists of the different growth stages.
Online communities aren’t immediately full-blown networks. They start small and grow as more members join and breathe life into the platform. For this reason, community managers, communication experts, and marketing managers need to look for software that can grow with them. The growth stages are as follows:
- Inception: This is the first stage of community growth. It’s about gaining as many users as possible or even focusing on a small group of active users. During this stage, you may not need fully developed software. Instead, you could choose the Distro or SaaS version to get the basic features and support.
- Establishment: During this stage, community managers need to focus on inviting members, promoting discussions, and building relationships. Our Premium SaaS version offers onboarding services that help you grow your community until it’s ready for the next stage.
- Maturity: Here’s when members of the community are generating 90% or more of activity/growth. Your community size increases and members know what they need to fulfill their goals. This is where it makes the most sense to customize and move to Enterprise. Essentially, you only start paying more as you grow.
- Saturation: During this stage, a community might experience a few inactive users and growth slowing down. This is usually after some time when the initial excitement has died down. It’s a key stage to breathe new life into the community and keep engagement high. Keep in mind, not every community experiences this.
- Mitosis: During this stage, the community is pretty much self-sustaining. This is when the ‘nice--to-have’ features can be implemented, even on your own! You began by profiting from lower total lifetime costs of the standard features, and now have the flexibility to add enhancements.
We know that online communities are here to stay. They offer a space to group and personalize content, away from privacy threats and ad traffic from the social network conglomerates. OpenSaaS is the best way forward because it’s technology that can be customized and grow with the community.
And it’s not just great for in this context; there have been great examples of successful open source SaaS projects that are valued for their flexibility and customization, such as the e-learning platform Opigno LMS and the recruiting platform Jobiqo.
You can read more about this in our blog post How to Grow with Customer Success as a SaaS Business
What to expect in 2019?
SaaS technology has more to offer than we could possibly refuse and is slowly overtaking the leadership position. According to Cisco’s Global Cloud Index for the period 2013-2018, 59% of all cloud workflows will be delivered as software-as-a-service (SaaS) by the end of this year. And the cloud computing coupled with open course technology will generate software that’s flexible, scalable, and can be integrated with a variety of systems.
The growing demand will motivate powerful investors to fund important technological innovations, which means that a SaaS utopia may not be as far away as we think.
Better yet, incredible innovations often emerge just when it looks like everything has been changed and we’ve reached a new normal. We’re looking at you, blockchain technology ;)