My proximity to New York has given me a close up view of the economic problems we are facing. I have many friends and neigbors who have either lost their jobs in large organizations or have problems sustaining their small businesses.
Having just returned from a trip to New Zealand, its been interesting to experience the general morale of NZ vs. New York. The problems are far more visible in New York at this point. That may change over time.
Anyhow I digress..
For the last 18 months, plenty of bloggers have talked about how SaaS will perform in a recession, now the "proof is in the pudding" so to speak.
Can SaaS really outperform traditional On Premise Software solutions in such a challenging environment?
Sramana Mitra writes that
Salesforce.com (NYSE: CRM), the leading SaaS vendor, yet again, reported strong third quarter results on November 20 that beat Street estimates in an increasingly gloomy economic environment: yesterday the National Bureau of Economic Research officially declared that the U.S. has been in a recession since December 2007. Despite the challenging market conditions, Salesforce.com is set to cross the $1 billion revenue milestone. I believe the SaaS sector is relatively recession proof, and Salesforce.com’s performance this quarter is more evidence of the sector’s strength.
Now this has to be concrete evidence of the robustness of SaaS in all economic climates.
Admittedly Salesforce.com is the most dominant On Demand company on the planet, and by traditional comparisons its in the top 10 largest "software" companies in the world (not that Salesforce.com really wants to be labelled a software company).
However the core strengths of SaaS should help the smaller SaaS vendors as well. I am not saying its going to be easy for any organization, but the strengths of SaaS for an end user organization should at least give some sort of advantage when competing for a job
These strengths include
Lower Cost of Ownership
No internal technical resource requirements
Operational Expenditure vs. CapEx.
All of which are significant benefits during tough economic times. In fact these could generate revenue opportunities for SaaS. In particular within organizations who have had layoffs, have a hiring freeze and spending cuts, SaaS could well be a cheap way to provide services within these restrictions.
Not all SaaS vendors are going to survive through these times, but in comparison with traditional on premise vendors, I truly think SaaS has key strategic advantages which should see it in good stead.