Saas is a great business model as long as you can handle the deferred revenue part of it, essentially you are financing your customers purchase of the software.

Saas is a great business model as long as you can handle the deferred revenue part of it, essentially you are financing your customers purchase of the software. This can be painful when you are cashflow negative but once you go positive it is terrific as you have a steady and predictable cash flow stream. I think the biggest benefit of Saas is that it matches the incentives of the vendor and customer far more closely than traditional packaged software. Rather than the sell and run approach of packaged business process software you focus on getting successful deployments and making sure the customer stays happy and around for a long time i.e. low churn rate.