I attended a web presentation on SaaS / Cloud Implementation by Robert Kulhawy, Ken Powell and Kevin Nikkhoo. The presentation was from the perspective of developing a SaaS business from the software vendor perspective. Here are the pros and cons of cloud based solutions they outlined.
Pros:
1. Cost Effective
2. Allow businesses to focus on their core business
3. Ease of implementation and management
4. Operational cost instead of capital cost
5. Flexibility and scalability
Cons:
1. Perceived Security of information
2. What happens if the provider fails and you still want to use the software
3. Internal IT staff has empire threatened and gives up some control
The recommendation when developing a cloud based offering is to not over customize and to develop a multi-tenancy solution that scales in order to gain price advantage. The recommendation is to price the offering at an order of magnitude less than the traditional solution meaning not half the price but 1/10th the price.
The challenge for the provider is then to drive the volume and keep the transaction low touch and standard contracts. Historically, this takes a significant amount of time and the cloud provider needs to be prepared with great tenacity. The good news for the consumer is the price will be very compelling and if you are able to adapt your business to a cloud offering it will be a very effective solution.