SaaS is an acronym for Software as a Service. SaaS is a software delivery method that provides access to software and its functions remotely as a Web-based service. SaaS allows organizations to access business functionality at a cost typically less than paying for licensed applications since the pricing of SaaS is based on a monthly fee. Also, because the software is hosted remotely ––“in the cloud””––users do not need to invest in additional hardware.
SaaS aka On-Demand removes the need for organizations to handle installation, set-up and often daily upkeep and maintenance. SaaS lowers the cost of business solution ownership and provides predictability of costs over time while allowing companies to focus more towards providing their core products and/or services to customers. SaaS provides improved security, performance and availability with reliable access to data anywhere, anytime via an Internet browser. In short, it provides more rapid time to production and value while avoiding the technology lock-in of licensed applications.
The most basic feature of SaaS from a business perspective is its on-demand flexibility relative to on-premise systems. For small businesses with fixed capital constraints, a SaaS model can unlock value that would typically be stifled by either expensive IT infrastructure implementations or insufficient support by home grown IT solutions. Software-as-a-Service significantly reduces the cost of technology ownership, enabling SMBs and enterprises to redeploy their investments into building their brand, product or channel, and not on software.
SaaS – Technology Tenets
• The ability to access and manage software over the Internet.
• The applications are stored on a central site or repository. App Delivery is largely standardized and made available to multiple users or companies, commonly referred to as a “multi-tenant” model.
• The back end is managed and monitored by the third-party software provider. This ensures timely upgrades and involves zero effort on the customer’s side.
SaaS Drivers
Cost: The “Pay-as-you-go” model makes it extremely attractive for SMEs to have enterprise-like software. (This is akin to using utility services such as electricity, water, phone, etc.)
Connectivity: The proliferation of Broadband with ever-increasing speed has been a major influencer for the heightened interest in On-demand Services aka“Cloud computing”, SaaS et al.
Convenience: The convenience of shifting to an alternate service is as easy as a mouse-click. Unlike in conventional software, there is no exit barrier for the customer to Rip and Replace without incurring additional charges.
SaaS Projections
SaaS is one of the hottest topics in the IT world currently and has attracted phenomenal attention from Customers, Vendors, Channel Partners, Analysts et al.
Research backs up the widespread adoption of SaaS in business:
* IDC reports that it expects customer spend on SaaS to increase to $14.8 billion by 2011.
* Gartner Group reports that SaaS revenue in enterprise application software alone will grow 21% in 2007 to reach $11.5 billion by the end of 2011.
* Further, SaaS is forecast to grow at 22.1 per cent until 2011 – more than double the 9-per cent growth rate expected in the market as a whole.
* McKinsey reports that the proportion of CIOs considering adoption of SaaS applications in the coming year has gone from 38% a year to 61%.
* By 2012, 30 per cent or more of all new business software will be deployed and delivered as SaaS.
* SaaS usage within mid-size and large enterprises will more than double by 2010 – averaging more than 7 SaaS solutions in production.
* By 2010, at least 65 per cent of businesses will have deployed at least one SaaS application.
SaaS Checkpoints for Customers
Here are some important checkpoints for the customers to consider before choosing their SaaS vendor:
* Does the SaaS platform offer a good choice of services via their catalogue? * Does the platform support Open Standards?
* Does the platform offer a secure payment gateway?
* Is there a support infrastructure to handle post-sale queries?
* How long would it take for the service to be provisioned after the buying decision?
* Does the vendor offer training for the services purchased?
