Companies fret as costs soar for software subscriptions


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The software as a service—or SaaS—market is going gangbusters.

That’s great news for SaaS companies, and in many cases for customers, who prefer to essentially rent their software and receive automatic updates rather than buy it outright and be responsible for its upkeep.

Subscription software usually requires less hardware and personnel to run. It’s updated and improved frequently—which means it often offers more features and functionality than software out of a box. And SaaS companies are known to be responsive with customer service.

Plus, the initial cost—with SaaS companies offering myriad payment options and introductory offers—is often lower than buying and maintaining software.

But over time, costs add up. In fact, the expense of software subscriptions—on a per-employee basis—is now rivaling the sky-high costs of providing employees and their families with health insurance. As a result, the proliferation of SaaS has become a big problem for the companies that use it and a giant headache for many information technology administrators.

“In some ways, this is like a runaway train,” said Brad Wheeler, vice president for information technology at Indiana University. Every chief information officer “has his hair on end about this. And we still don’t know where this is going.”

The worldwide SaaS market is on a trajectory that would make any Wall Street analyst salivate. It has grown from $5.6 billion in 2008 to a whopping $116.4 billion in 2018, according to research firm Statista. Read full story.