I recently had a colleague tease me that I was jumping on a trend bandwagon. I avoid all such nonsense and stick with evergreen concepts most of the time so I was surprised by his teasing. I asked him what “trend” I was jumping on. He said “SaaS.”
I told him that I had advocated SaaS as a business model since long before the term SaaS had been invented and would continue to support this evergreen business model for long after SaaS is a popular term.
He looked surprised and asked me what SaaS was called before it was called SaaS… and what SaaS products I had offered in the past.
We have to answer the question “What is SaaS?” to answer that question. In the strictest definition, it is software that is offered online to subscribers who pay for access to that software (as a service), but never receive that software on any particular media. For instance, OpenOffice.org is NOT SaaS. You download it and have access to it. You don’t pay to access it only online.
A looser definition might ignore the payment part of the equation. Is it SaaS if you access it online and not everyone can access it (ie: you have to login to access it)? Many would accept free software that is accessed online and access is controlled to be SaaS.
What about software that you pay a monthly fee to access, but you receive it on a CD… however to access that software on CD, it has to “call home” via the Internet to validate that you have paid your dues? That is an even looser definition of SaaS, but many would accept that it is still SaaS.
It doesn’t have to be online to be SaaS, but the owner of the software has to have the ability to turn off access to the software for a particular user for it to be considered SaaS. That definition can still be met with a “call home” technique with desktop or mobile software.
What about software vs. information delivered by software? If you can access a private forum for a monthly fee and have to login online to access that forum; is that SaaS? Many would agree that it is still SaaS even if the content is the main focus and the software is just a means to present the content.
With these looser definitions of SaaS, we get to the heart of a business model that has existed long before SaaS and will exist long after that trendy acronym has faded from our memory. Before it was called SaaS, it was called a membership site, a paywall or a subscription service.
The common key components of this evergreen business model are:
1. A fee (preferably a recurring fee).
2. Access to use software, but not actually being able to control the access. The owner of the software can “turn you off” especially if the fee isn’t paid.
3. No real ability to pirate the software (give unauthorized working copies to other people).
4. An ongoing expectation that the software (or the data presented by the software) is going to be constantly updated.
5. Less of a concept of “versions” of the software. The owner of the software generally automatically pushes out new versions and the user base isn’t fragmented among several different versions of the software.
My first Internet business was based on SaaS even though SaaS didn’t even exist. I sold traffic and leads. As long as you paid your bill, you had access to a private area that only you could access to use my software online. That software helped you set up your ad campaigns and monitor your campaign progress and see how much you owed. Some would claim that isn’t SaaS because:
1. SaaS hadn’t been invented as a term yet back in 1996 when I got started.
2. I was technically charging for the traffic and leads, not access to the software.
Those details are both a bit silly. SaaS is SaaS under any name. You can say that I sold access to the software or you can say that I sold leads and the software was a tool. The business model was the same.
Later, I had two membership sites. One was called QuitThatJob.com and that lead to the Freedom Event and the FreedomEventClub.com. In both cases, you paid a monthly fee to access my software online. That’s SaaS.
Later, I sold actual software (RaSof and Glyphius) as true SaaS even though that term hadn’t yet been invented. That is still SaaS.
I also sold a monthly newsletter with a yearly fee. Although that subscription service was theoretically delivered via postal mail, I also uploaded a PDF copy to a private subscriber’s only area that required a login. When you cancelled your subscription to the James D. Brausch Letter, you also lost your access to the private Internet login area that contained downloads of the various applications mentioned in the newsletter and PDF versions of that newsletter. That too is… SaaS… or at least the predecessor to SaaS.
Subscription and membership services have been around for longer than the Internet itself. If you charge a fee (preferably recurring) to access some software and use it as a service (ie: you care more about the output of that software than the software itself), then you have a SaaS solution.
I have always highly recommended this business model and still do. It is a great way to build your Internet business empire. And it has been since before the word “SaaS” was invented and will continue to be long after it goes out of style. That isn’t jumping on a new trend. It is riding a very stable, long-term, evergreen business model that has proven itself historically and will continue to prove itself under whatever name is currently used to describe selling access to software or information for a subscription fee in a private membership only area.
-James D. Brausch