The secret is the business model: pay-as-you-go.  SaaS offers lower risk to enter, no initial cash layout, the subscription fees come out of OPEX vs. CAPEX, and is often approved by the User, not the mysterious Economic Buyer.  The barrier of entry is much lower: once you’re in, it’s up to you to grow.

In fact I suspect the looming downturn will accelerate the structural changes in the software industry: SaaS players will thrive,  traditional on-premise vendors will shrink, many will disappear.

Since we’re now officially in a recession, it’s time for everyone to revisit their plans. Some will gain, but most will lose, and some to be really affected by the downturn are enterprise software vendors selling expensive perpetual licenses for their products. The problem will get even worse for those selling expensive BPM software that can only be deployed by expensive consultants on the vendors’ payrolls.

With the recession coming, IT budgets will be cut, and only the most critical projects are likely to be funded. Projects that require expensive software to be acquired and expensive consultants to be paid will be canned. Vendors relying on such projects will go out of business, unless they find ways to significantly reduce costs internally.