It would be an understatement to say the software-as-a-service (SaaS) model has become the dominant one in the software industry. This model (where you pay monthly or yearly for software instead of buying the license outright) is now being used primarily or exclusively by each of the Top 10 software companies in the world.
While Salesforce gets credit for being the earliest SaaS player on this list, Microsoft’s transition of its Office productivity suite to a SaaS product in 2011 signaled to the software industry that SaaS would be the dominant future model. At the time, a single Office 2010 business license cost $200 to $500. A business Office 365 license cost as little as $7 a month. While the recurring revenue was great for Microsoft, monthly pricing was also hugely beneficial for small and mid-size businesses, who didn’t have to pay tens of thousands of dollars to upgrade their Office suites when new versions became available.
More to Consider Than Cost
Software providers can quickly rattle off other benefits of the SaaS model, too. You don’t have to wait years to get new features; they roll out every few months. It’s easy to scale your licenses up and down based on the number of employees you have. Many SaaS products also come with an online file storage component, although this file storage is typically consumer-grade; it is not necessarily guaranteed to be accessible, backed up, or easily restorable if it is accidentally deleted.
One of the biggest benefits of SaaS software over the longer term, however, may be security. When the non-SaaS Windows 7 reached end-of-life in January of this year, there were many companies (and even more government agencies) who had still not transitioned to Windows 10. Security updates and support became extremely expensive after that point, and very few people purchased it. Most Windows 7 computers are now vulnerable to hacks and exploits that have been discovered since January, and the list of security flaws will only grow over time.
Compare that to Software-as-a-Service model. Each monthly payment entitles you to a current version of the product. That means that companies will not face the painful choice for SaaS products that they did for Windows 7: spend thousands of dollars to upgrade to new software or continue to run a discontinued product with known security flaws. Instead, patches will always be available for SaaS products, and in many cases they will be applied automatically.
Windows 10 follows a SaaS model – minus the monthly fee. For the last five years, all license holders were always on the most recent version. There’s no Windows 11 in the wings, either. Features are rolled out on a twice-annual basis, with any licensed computer able to use them. Microsoft calls this Windows-as-a-Service, and has referred to it as the “last Version of Windows.”
Office365 follows the same model, as does Adobe Creative Suite, QuickBooks Desktop Pro Plus, and countless other apps. So while your monthly fees might go up as a result of the SaaS transition, so will the quality of security on your software. Just make sure you pair those apps with a disaster recovery plan!