In one very real way, the small to mid-sized enterprise (SME, SMB) has been forgotten by the SaaS world. I know that some would say the midsized firms are the biggest beneficiary, but if you listen to the pulse, and perhaps read some of the very well researched articles by Ben Kepes , adoption of the SaaS versions of small business’s primary application, Accounting, has been, well, let’s be honest, poor.

I can think of one very simple reason for this, and we have been here before: business does not like to invest lots of time, effort and money changing the way they do things unless there is some clear, and somewhat immediate, benefit. And small business is least likely to be able to afford flights of technological fancy.

But there is hope.

We’ve Been Here Before

This isn’t the first time we (the collective We, the Internet Generation We, the venture financed We, the We who have great technology ideas and the We who subscribe to and proselytize them) had a great idea that had a hard time getting out of the starting blocks. In the larger banks and corporations I worked at for years, the movement to "webify" applications ran wild. Millions of dollars was spent in "translating" many in-house applications to web technologies.

And what was the end result? Great progress was made and proprietary application programming became easier (in some ways), but ultimately, only a relatively small number of really peach projects ever crossed the bridge and became fully webified. The cost and expense wasn’t justified and the existing "fat client" applications worked pretty well.

We’re Here Again

The difference being: now there are a plethora of options for the company that is ready to make the transition to SaaS, but that old cost benefit issue is still playing a major role. Small business is not seeing enough of a benefit to warrant the cost of transitioning to a new platform.

Let’s consider only Accounting applications for the moment. The list is long and there is no shortage of major players and seemingly high quality applications. But they all suffer from the same problem:

• SMB has software in this place that is satisfying it’s needs
• this software is tried and true (or at least it’s the "devil you know")
• there is not enough of a perception of value to inspire many SMB’s to undertake the cost of a transition to new software:
  • extensive data translation (no matter how easy they say it’s going to be)
  • relearning
  • business process reworking

Okay, so where does that leave us?

SaaS an SMB Can Love

When we take the applications that clients are currently using and host them in Cloud data centers, then package that service up as SaaS, the adoption rate goes hockey-stick. This model contains some of the best aspects of SaaS: fixed cost, it’s fully managed at the application layer, no requirement for hardware purchase. There are lots of different flavors of SaaS and Cloud Computing – this "service cloud" is one clear segment.

Some of My Favorite (SaaS) Things

• Packaging: per seat/per month pricing
  • Clients don’t want to have to purchase the farm to ride a horse
  • The service structure and pricing should allow anyone to use the software and only purchase as many seats as they need

• Multi-Tenancy
  • This is really invisible to the end-user, but it’s what allows us to do the above and achieve the density of use and scale that reduces cost to the point where hosted services become not only truly affordable, but cost-advantageous

But here’s what you’ve gotta Love: these are the applications small business is already using. No transition costs . Minus the costs of supporting your own server infrastructure. That makes the decision to go with SaaS a lot easier and that’s why we’re seeing a tremendous adoption rate of this brand of SaaS.

Please chime in! I’d love to know your thoughts.

Happy Serverless Computing!

Philip Meese