Archive for March, 2010

It is time to discuss SaaS

Wednesday, March 24th, 2010
SaaS or Software as a Service is a technique in the field of software technology that enables you to hire any software application only when there is a requirement of such a utility. In other words, it is a web-based, on-demand software service provided by vendors to consumers. The licensing for using this application may be solely with a single user or it can be shared with multiple users (as per the product ordered). The user license terminates as soon as the purpose of this application software is over, thereby eliminating unnecessary expenditure in the future. Businesses use a pay-as-you-go method (typically monthly) for SaaS applications allowing them to save their capital for core business functions.

A classic example of SaaS for the average consumer is online banking or online tax preparation software. In the business world, Google Apps is a common SaaS offering.

The SaaS methodology is becoming popular because of its high services and less maintenance. The availability on demand makes it highly flexible when the maintenance of the tool is taken into account. The user does not have to be troubled with maintenance, when the application is not in use. Moreover, the on-demand service also saves the complex hardware requirements, once the use of the software is complete. The SaaS allows a centralized control of the business by the service provider. In other words, the network of action is distributed amongst many users from a single server. Thus, there is lot of sharing, i.e. sharing in the license.

Sharing of license within an organization makes you cut down the expenditure on EULAs (End user License agreement). Although SaaS permits sharing of license, the individual security is not hampered. In addition, there are no copies and distribution, which further extinguishes threats on security of individual system. Therefore,SaaS is the perfect service to meet the demands of any software consumer. The SaaS also omits re-installing of the software within an organization because of the central control.

A brief history …

SaaS almost died with the dot com bubble. While initially hailed as a concept whose time had come in the late 1990’s, SaaS grew wildly based on inflated expectations and amid the unsupported growth of the dot com bubble. When the bubble burst, SaaS fell from grace along with most other new technologies. However, unlike the majority of over-inflated concepts, SaaS came back and excelled beyond its dot com stage.

In the late 1990’s, the initial difficulty with CRM (Customer Relationship Management) SaaS was that the software applications at that time were not intended for hosted delivery. Few people disagreed with the concept of subscription pricing, hosted delivery, and outsourced expertise, however, the CRM applications were not designed (and not capable) of operating over the limited bandwidth of the Internet and the software vendors were not interested in changing their pricing model from an all-money-up-front approach to a deferred revenue collection over the life of the customer. The generation of CRM vendors at that time – led by Microsoft, Oracle, and SAP – took the approach to ignore SaaS, and even ridicule SaaS, rather than embrace an inevitable application software evolution.

Benefits …

The benefits of SaaS are improved average revenue per user (ARPU). This is a strong benefit behind offering SaaS. As a SaaS provider, you define service plans that appeal to existing and new customers while automating tasks for greater scale of service. The advantages the SaaS delivery model brings to the end user (individuals, SoHos, SMBs, and corporate clients) are the main drivers for companies to change the way they think about software deployment. Some of these advantages include:

  • FinancialSaaS is subscribed to and not purchased; instead the end users are offered less costly and more predictable monthly fees, with no capital expense.
  • Ease of useSaaS applications can be easily accessed anywhere the Internet is available through a web browser, thus taking advantage of attributes like usability and innovation of the web.
  • Uptime– Server applications are hosted in a highly-available datacenter, minimizing the effects of power outages and Internet outages from incidents that affect local offices.
  • Faster Time to Market– Cloud and SaaS services can be brought to market quickly using automation service modules.
  • Installation Ease and Low Maintenance– upgrades and patches to latest versions take little time and reduce resource requirements.
  • Access Anywhere– customers can connect to their applications anywhere with a Web connection.
  • Low cost of entry and lower total cost of ownership– elimination of capital expenditures and dramatic reduction in IT salaries.
  • Vested vendor interests– if the application utilization is not successful, the vendor loses the customer revenue opportunity.
  • Much lower risk– faster implementations and outsourced expertise dramatically lower risk.
  • A more powerful and secure IT infrastructure– few organizations can match the infrastructure and security investments made by SaaS vendors.
  • Hosted ISV applications suited to the SaaS model include collaboration software and business applications such as e-commerce, customer relationship management, web content management, and email.

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*Did You Know– A recent Gartner study predicts that SaaS will enjoy a compound annual growth rate of 22.1 percent through 2011 for the aggregate enterprise software markets – more than double the rate for total enterprise software.