Volatile markets are pushing companies to switch to the monthly subscription models.

Monday 27, August 2018

Volatile markets are pushing companies to switch to the monthly subscription models.

Various articles has been investigating the rise of SAAS ( software as a service model ). If you are familiar with what SAAS is, it is simply defined as

“ Software as a service (SaaS) is a model for the distribution of software where customers access software over the Internet. In SaaS, a service provider hosts the application at its data center and a customer accesses it via a standard web browser. “

We cannot deny the value SAAS products has added to organizations, startups and even enterprises. No matter what your field of work is : whether you provide web design service, web development , app development or even you sell online through wordpress or e-commerce solutions likeShopifyOur sources has known that Careem was extensively using zendesk until the time this article is written, Careem are in the process of switching their ticketing system. But why use SAAS products in the first place ? And why is there a lot of SAAS products that even Microsoft has switched to Office 365 ? We try to investigate the reasons in this article.

Why SAAS Companies switched to Software As a Service Model ?

The answer to this question is two sided; the supply side and demand side. We will start with the dissecting the demand side :

A) Demand Side : Consumers Switching to SAAS platforms

Customers usually are looking for the maximum amount of benefit for the least amount of payment; in economics, the are called profit maximizing agents. To keep it concise, here are the main reasons companies use SAAS over ERP’s :

  • ERP’s are expensive, specially for SME’s . If you are a web or app development company ; you will not necessarily need a CRM Software, an HRM Software, or a social media management system. You will usually settle with Jira for technical departments,invisionfor Design Department and Quickbooks for Accounting. In which the total sum of the services will not exceed $200 monthly instead of paying thousands to salesforce for example.

  • SME’s tend to require systems on demand, unlike enterprises, at one stage you might require a ticketing system to handle a batch of clients for a specific deal, so you reside to Zendesk or [FreshDesk] to handle the heat and then abandon it.

  • Companies care about their cash flow, so why pay $6000 for salesforce yearly while you can just pay $15/user for an alternative like Pipedrive ?

    B) Supply Side : Companies Switching to run on SAAS model.

    The supply side is where things are on a rollercoaster. The global economy is going crazy nowadays; with wars, brexit …etc. That lead to economies being really volatile, various companies are getting affected with the volatility and cashflow is becoming an increasingly annoying issue. Therefore, companies are switching to the subscription based models to keep up with the volatility give. I will list some companies here that few years ago we did not think would reside to subscriptions as a revenue stream.

  • Careem , announced monthly subscription on June 22nd, 2018 June 22nd, 2018

  • Bloomberg , announcement monthly paid tiers to access their content on May 3rd, 2018

  • Facebook , announced subscription program for Content Creators on April 9th, 2018

  • Mercedes-Benz announced a pilot High-End Vehicle Subscription Service on April 12, 2018

and the list goes on. To conclude, it is pretty obvious the volatility in markets is Psomething that is not going away soon; however, the industry of technology is still one of the hottest industries in the world right now. In case you have a good idea that you want to design or develop as an app or a website. Make sure the team you pick is aware with the recent trends of the industry so they would know how to properly guide your app development.