Monday, July 07, 2008

Accounting - obstacle to SaaS adoption?

My buddy Billy Bosworth has a short post on this topic worth reading. Something that software designers and product managers probably don't think about:
Tony Bain has written a nice succinct post from someplace we don’t hear from often: the real world. ;-) It is a quick and interesting read on a few obstacles to saas adoption. This one is VERY true, yet often overlooked. (note: CAPEX = Capital Expense; OPEX = Operational Expense)

CAPEX vs OPEX. The primary issue we encounter when positioning SAAS is an organisations budgeting process hadn’t planned for a SAAS offering. Many customers get a CAPEX budget approved in advance, then evaluate tools and on making their selection they need to spend the budgeted CAPEX. An OPEX based SAAS offering may be a good fit for them, but the requirement to go back and redo budgeting is so undesirable that almost always in this situation the customer will elect the CAPEX option.

It’s not like it’s tough to overcome technically, but it will require a shift in budgeting philosophy.

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1 comment:

Kevin Doherty said...

Good point, one that we encounter often. Our experience has been that the customer may be eyeing a SaaS provider for awhile, and not actually begin using the service until they are faced with one of those capital expenditures. Then they have a good justification to make the case to their management.

Kevin Doherty
Phase 2 International