SaaS, and the Decline of Self-Hosted Software

April 16, 2009

Last night I saw this tweet:

Back in 2004 – the year we launched – we used to get a lot of requests from people who wanted to host the FreshBooks service (then called 2ndSite) on their own servers. In fact, we used to get so many that we seriously explored making our software available for installation by third parties.

Why would we consider such a thing? While it may seem crazy today to offer your product as licensed software instead of as a hosted service, back then Software as a Service (SaaS) was not common practice – and I’d argue it still isn’t. Because we had almost no customers and no revenue (we were working out of my parent’s basement back then), the thought of licensing our service was pretty attractive because you could get a lump sum payment of revenue. When I think about it, it’s amazing how far things have come in these five years.

Today, almost no one asks to host FreshBooks on their own servers, which tells me the market is becoming much more comfortable with SaaS. And what’s not to like? No installation, automatic upgrades, outsourcing of backups and security…   Instead of having to become an expert and provide support to your users, you have experts serving you.  If you have a question all you have to do is call, post, twitter or email – not too shabby.

Hosted Software is dying, and with good reason. Long live SaaS.

about the author

Co-Founder & CEO, FreshBooks Mike is the co-founder and CEO of FreshBooks, the world’s #1 cloud accounting software for self-employed professionals. Built in 2003 after he accidentally saved over an invoice, Mike spent 3.5 years growing FreshBooks from his parents’ basement. Since then, over 10 million people have used FreshBooks to save time billing, and collect billions of dollars. A lover of the outdoors, Mike has been bitten so many times it’s rumored he’s the first human to have developed immunity to mosquitoes.