SaaS/On Demand not immune to the downturn

Per Joe Panettieri’s article (here), I’ve never agreed with analysts who believe that the SaaS/On Demand players would somehow be recession-proof (read my earlier rant here).  There’s a lot about the business model that’s compelling, but not this.

The ease with with one can consume services — which certainly does promote usage — is matched by the relative ease with which one can stop consuming services.  If one can get in easy easily, one can get out easy easily (sure, there are caveats, especially if one has been hooked for a while).  Also, trying to mitigate that risk by locking-in revenue with longer subscription periods sounds good, but it makes SaaS/On Demand too strongly resemble an On Premise relationship.

I agree with Joe that this period will shake out the SaaS/On Demand players.  Those who don’t have a truly “sticky” value proposition will be gone or acquired.