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Software as a Service (SaaS) is method of using the software by businesses and interested parties where the software is hosted by the vendor of the software and is delivered to the customers via a web browser on internet. The same piece of code is used by hundreds of users distributed globally and is hosted in a central location by the vendor. There are many names for this like "on-demand", "remotely-hosted" and "Application service providers (ASP)". The customer who is using this service pays the vendor or host of the software on per-use basis. There is lot of hype about SaaS in the market about its advantages and disadvantages from customer's point of view. In this article I explain this in detail about SaaS so that you will be better informed to take a decision about SaaS. Potential: The concept Software as a Service was first circled in the late 1990s and since then it has gained much importance and acceptance among the users. Now, it looks like every major software company is providing such service in one form or another like antivirus software which is installed on the user's pc and gets updated via web, or any software for that matter. According to Gartner 30 percent of New customer service and support application investments will be through SaaS model by 2012. It also predicts that all forms of SaaS-delivered customer service applications in the call center will grow by more than 20 percent per year through 2012. This shows the potential the SaaS business model has and its acceptance by the users. There is wide variety of companies involved in the SaaS business model. Although it is in existence since fairly good amount of time, it is still evolving and companies are still struggling a bit to push it into mainstream. One of the successful companies based on this model is Salesforce.com providing the Customer Relationship Management (CRM) software services via the internet. Features: 1. No infrastructure costs: The first and foremost advantage of this model is someone hosting your software and you are saving on the upfront license and ongoing maintenance fees to run it on your own infrastructure. This is the primary reason for many companies to shift to this service. 2. No Human capital: Less human resources are needed to maintain the software running and thus saving costs. This also helps SaaS companies as they need to use fewer resources for large number of customers as the servers are located in a central location. 3. No maintainance headache and thus less risky: It is the responsibility of the vendor or service
provider to keep the software and servers running it up-to-date with patches and thus provide maximum uptime and fewer overheads for the customers using the services. 4. Low cost of implementation: There is a little bit of disagreement over this among the users, as even though it looks low cost option, it may be expensive over time as you will pay for the service on an on-going basis. This is good for companies offering this kind of service as revenues are predictable and more sustained for long term thus helping them in better forecasting, planning and positioning themselves in the market. 5 Less customization: Customers using this service has less scope for customizations as they need to use the same code base used by multiple other users. Even though the companies offering these services boasts that they are highly customizable for each user according to their needs, it is not generally done in practice from my experiences. 6. Security: I have seen there are some apprehensions among customers in terms of security for their data and systems; particularly if there business-critical applications are hosted and maintained by external companies. In such case, one can avail these services for less businesscritical tasks such as partner management software, Human resources management, etc. 7. Integration and Scalability: Often it is found that these services are not easy to integrate with other applications in the enterprise. There needs to be lot of work done to integrate with other applications as each application has own set of standards and business processes. It is found that SaaS offerings are much scalable as corporations can increase the system resources based on the need of the hour and depending upon the business plans. This will help the companies to reduce on the infrastructure costs for planned for the future. Also it must be noted that sometimes as these services are not customized for each user, they need to be customized seperately to integrate it with other applications of the company and it is not a simple process. Therefore, these services are best suited for Small and Medium businesses (SMB) rather than big corporations. The Software as a Service is available in many areas of a business like HR management, accounting, legal services, partner management, Customer Relationship management, Email, IT security and content management services. There are number of companies offering the Software as a Service today. Some of them are Salesforce.com, Oracle, Microsoft, WebEx, Citrix, SAP, GoToMeeting. Future of SaaS: It is exciting to see the future of the SaaS business model. Already there are signs of it becoming more and more popular as the number of companies which are providing the offerings based on it and number of customers signing up for these applications are increasing day-by-day, especially in the global economic slow down. As witnessed recently more number of big corporations are joining this party as the traditional way of using the software is becoming more of burden for customers.
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