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This economy will be good for SaaS

SaaS vendors offer cash-strapped enterprises a way to buy into new projects at a crawl, rather than at a sprint.

In talking with a large customer of mine today, he mentioned that tightened budgets are making SaaS look very attractive. (In a similar vein, I heard from a group of CTOs this morning that one big advantage open source has is that it's free to try/evaluate.)

No, SaaS probably won't save him any money over the long haul. In fact, it could end up being more expensive. But the ability to consume SaaS at low initial cost, and to spread out the cost over the life of a subscription, is very appealing.

Of course, traditional enterprise software vendors can also price their products on a subscription basis, but so much of their sales infrastructure and balance sheet depends upon an upfront license fee that I think they'll struggle to make the leap to subscriptions. Regardless, even moving to subscriptions won't change the high upfront costs associated with implementation.

The more I talk with customers, the more I think an open source-plus-SaaS model is a compelling value proposition, in good times and bad.