Are you considering upgrading to SaaS but daunted at the thought of it? In this blog we’ll review the pros and cons of perpetual licensing and Software as a Service (SaaS) as well as what to consider when transitioning to SaaS.
Evolving Technology and the R
ise of SaaS
As technology continues to evolve so too does the evolution of the software industry. SaaS known as software as a service is a software distribution model in which a third party provider hosts applications and makes them available to customers over the internet. Services are purchased via a subscription fee which is paid monthly for example rather than an upfront payment as you would do with a perpetual licence.
A perpetual licence model is a type of software licence which the individual owns indefinitely with an initial period of technical support and updates provided by the vendor. According to Gartner, SaaS remains the largest segment of the cloud services market to significantly grow with revenue expected to increase to 17.8%, to reach 85.1 billion USD in 2019 and by 2021 will account for 45% of all software options.
The rise of SaaS is more prevalent than before with consumers using subscription-based services such as Netflix, Spotify, magazine subscriptions or ecommerce type subscriptions such as Birchbox. An in depth survey on on the rise of ecommerce subscription services in US shoppers by McKinsey and Company, reports that 46% of consumers they questioned subscribe to Netflix and are now also turning to ecommerce type subscriptions, with 15% of online shoppers subscribing in the past year. In the UK market, 27% of consumers have already signed up to a subscription based service and according to Royal Mail the rise of the subscription box market is forecast to grow stating it will increase to £1 billion in the UK by 2022. The majority of users are aged under 35, with female users aged 25-35, signed up to receive a subscription box service at least once a week.
Subscription based services are fuelled by the adoption of cloud computing and SaaS solutions which are regularly used on a day to day basis such as Microsoft Office 365, Gmail and Dropbox. But what is driving the shift towards these services? Having instant access to services and updated information all via a range of devices it would suggest. Subscribers are promptly kept up to date with the latest developments or updates. For example, if a new series is released on Netflix, subscribers are emailed with the information and are also provided with suggestions as to what they might like to watch based on their interests. Consumers no longer need to wait for a particular TV series to be released for purchase in store and can instead watch via their subscription. Additionally, subscribers are able to access such services via a range of devices anytime, anywhere.
What is the difference between SaaS and perpetual licensing?
By migrating services to a cloud-based SaaS model, organisations no longer need to purchase bulk licences but can pay for services via a subscription fee. SaaS involves third party providers hosting, maintaining and supporting software requirements with lower initial upfront costs and removes the need for organisations to install and run applications on their own environment.
Perpetual licences on the other hand involves the customer buying the software outright, owing it indefinitely with an initial period of technical support and updates provided by the vendor. Once the support period ends, the customer can either use their current version of the software without additional support or pay a fee to avail of support and upgrades. Organisations which have a perpetual licence implemented usually have internal teams monitoring their infrastructure and looking after the backup of the software. SaaS based models follow best practice in terms of keeping up to date with security updates whereas perpetual based models may eventually fall behind with the rise in cyber security risks today.
Transitioning to SaaS
Moving to a SaaS based model guarantees a range of benefits. It ensures a smooth, efficient transition with third party vendors usually offering a fully managed service. This takes away the pressure from organisations to run the infrastructure themselves, ensuring increased capacity for your internal IT teams and reducing physical space taken up by servers or hardware.
Other benefits SaaS offers include:
- Lower initial costs with easier to manage subscription fees and reduced hardware costs
- Faster deployment with no need to worry about installing physical hardware
- Scalability – services are scalable to suit the growth of your business
- Ensuring the right version of software is upgraded as you need it
- No need to worry about technical support, maintenance, hosting and licencing as it’s all included within the service
The Future of SaaS
As mentioned earlier, the future of SaaS will continue to expand with an expected reach of 45% of total application spending by 2021. Of course, the transition from perpetual to SaaS will be determined by an organisations’ requirements, business goals and buying behaviour. With technology enabling more processing power, storage and security updates, as well as SaaS based models offering competitive pricing, more organisations will start to put their trust in transitioning to Software as a Service.
SaaS from Totalmobile
Still thinking of switching from perpetual to SaaS sounds complicated? It’s not as scary as you think. At Totalmobile, our WorkNow platform is a cloud-based platform that offers packaged Software as a Service solutions to our customers. If you’d like further information on how to implement SaaS within your business, contact us for further information or visit our website.