Executive Briefings

Will SaaS Follow Pay-as-You-Go Model of Google, Yahoo?

The online marketing services offered by Google, Yahoo and others is nothing more than Web services in another form. These services follow a pay-as-you-go model, in which the buyer only pays for the amount of services used and the amount paid is usually measured in pennies not dollars. And those pennies are adding up, with online advertising spending expected to top $80bn annually by 2010.
Perhaps this micropayment model is also the future of Web services or software as a service (SaaS). Soon, companies like Salesforce.com and Qualys could be offering their on-demand services with the same pay-as-you-go pricing as Google charges for sponsored links.
"IT is shifting the majority of the organization to manage services as a business. You cannot just treat this as a set cost and flat fee. There's a growing demand of the businesses and enterprise to be treated as a customer" says Yisrael Dancziger, CEO and president of Digital Fuel, a company that makes software specifically for measuring SaaS utilization.
The pay-as-you-go model for Web services is like cell phone service without a contract: you pay for only the minutes used. Google keyword marketing campaigns only charge pennies for each time a Web surfer clicks on a sponsored link. Facebook, the rapidly growing social network site, is offering advertising services where you can buy ad distribution across its network for pennies with predefined limits on the maximum amount charged.
Enterprise-class Web services, however, follow a more traditional model, subscription based. CRM and financial analytics SaaS vendors such as Salesforce.com and NetSuite sign corporate customers up for subscription-based services that are more similar to cell phone pricing plans: for a set monthly charge, you're given access to a certain level and amount of service. Could that change?
Source: Baseline, http://www.baselinemag.com

The online marketing services offered by Google, Yahoo and others is nothing more than Web services in another form. These services follow a pay-as-you-go model, in which the buyer only pays for the amount of services used and the amount paid is usually measured in pennies not dollars. And those pennies are adding up, with online advertising spending expected to top $80bn annually by 2010.
Perhaps this micropayment model is also the future of Web services or software as a service (SaaS). Soon, companies like Salesforce.com and Qualys could be offering their on-demand services with the same pay-as-you-go pricing as Google charges for sponsored links.
"IT is shifting the majority of the organization to manage services as a business. You cannot just treat this as a set cost and flat fee. There's a growing demand of the businesses and enterprise to be treated as a customer" says Yisrael Dancziger, CEO and president of Digital Fuel, a company that makes software specifically for measuring SaaS utilization.
The pay-as-you-go model for Web services is like cell phone service without a contract: you pay for only the minutes used. Google keyword marketing campaigns only charge pennies for each time a Web surfer clicks on a sponsored link. Facebook, the rapidly growing social network site, is offering advertising services where you can buy ad distribution across its network for pennies with predefined limits on the maximum amount charged.
Enterprise-class Web services, however, follow a more traditional model, subscription based. CRM and financial analytics SaaS vendors such as Salesforce.com and NetSuite sign corporate customers up for subscription-based services that are more similar to cell phone pricing plans: for a set monthly charge, you're given access to a certain level and amount of service. Could that change?
Source: Baseline, http://www.baselinemag.com