Saturday 19 December 2015

Funding SaaS in Education

You can often gain an appreciation of how mainstream an emerging technology has become by  reviewing the press release for the annual Gartner report  Top 10 Strategic Technology Trends For 2016.

In this respect, the future is looking pretty good for Software as a Service (SaaS) as it's not mentioned at all.

This is normally an indication that the technology has shifted from ‘strategic trend’ to ‘commonplace reality’ and the focus of the reviewer has now settled on more compelling subjects such as mesh computing and the internet of things.

So as we move into 2016, SaaS is no longer new and it's certainly not worth a 'rising star' award - it’s just the way software and services are delivered in a modern IT environment.

In a competitive market, faced with budgetary pressures and the frustration of maintaining complex legacy server systems, it should be no surprise that business has embraced SaaS so wholeheartedly.

It’s not like the education space has been particularly slow in this area either. Google estimates that Google Suite for Education (GSfE) currently hosts around 50 million users and the majority of new software titles are now delivered as SaaS or as mobile apps backed by cloud services.

However there are a number of constraints in the education space that are holding back the widespread adoption of SaaS, and principal amongst these is funding.

Historically, computer infrastructure in schools has been supported through a capital grant. Funds are allocated for a desktop refresh or a server upgrade with perhaps a small reserve to cover maintenance and warranty renewals. The investment normally results in a trolley full of iPads or a new storage system that the school can point to and say  “this is what we got for the money”.

In contrast, SaaS relies on a constant revenue stream.  The traditional model is very unfriendly for a subscription-based product because the funding is so uneven.

Up to now the issue has largely been avoided by the simple expediency of giving away the base service for nothing but as the SaaS market matures and education looks to take advantage of the more advanced features that are accessed through a subscription fee, this problem is going to become more apparent.

To address this issue, SaaS vendors may have to become a little more creative about exactly what constitutes a subscription and sell access licences for longer periods than the traditional monthly or annual terms. The danger is that this might stifle innovation by funneling funds into established and trusted brands so we just end up back where we started.

To access SaaS, schools will still require an element of capital expenditure to provide a robust local network, an enterprise level wireless system and a set of mobile devices, but as we move into 2016 the shift to a revenue model for IT is likely to present a challenge that may take a bit of imagination to solve.

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