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SaaS: Continual Disruption Shakes Even Established SaaS Vendors
The world of technology seems to spin at ever more dizzying speeds. 15 years ago, change was happening rapidly at a speed that was referred to then as ‘Internet time’. But change is happening even more rapidly now. Maybe now we’ve sped up to ‘Cloud time’. SaaS vendors have managed to threaten and disrupt the business model of on-premise vendors over the last decade. But now even those first-generation SaaS vendors are vulnerable to another wave of disruption coming from a new crop of SaaS and cloud vendors.
Robert Desisto, Vice President, and Distinguished Analyst at Gartner, wrote that “vast majority of vendors who offer SaaS in the enterprise market do so with a fixed term subscription basis. This means there is no ability for a SaaS customer to pay for what they use, something we commonly see with infrastructure as a service or in many lower end consumer or SOHO applications. This was supposed to be one of the foundational tenants of SaaS but has rarely been offered because SaaS vendors want large contract lock in. SaaS vendors were also supposed to be agnostic to the end of quarter or end of year deals. Clearly, in my experience of reviewing 100’s of contracts a year, SaaS vendor salespeople behave just like their on-premise ancestors.”
Matt Asay, VP of Business Development at MongoDB, wrote that “none of this would be a problem if Amazon would keep its service-oriented pricing to itself. But it hasn’t. Instead, Amazon has made pay-for-use pricing a new industry norm. This challenges not only old-school tech vendors but also new-school SaaS vendors.” Amazon may be leading the next generation of SaaS and cloud vendors.
