SaaS-Sourcing-a good option for your business?
Merrill Lynch predicts the market for SaaS and Cloud Computing to be $160B, including $95B in business and productivity applications. According to Saugatuck market researchers, a fifth of the IT tasks will be managed with Cloud Computing by 2013. In addition, recent predictions talk about 25 percent of business software which will be delivered under SaaSs models by 2011.
Obviously everyone is talking about SaaS models, but what actually is SaaS and what is it good for?
The concept of SaaS is often associated with application service providings (ASPs) of the 1990’s. However, these applications have not much in common with SaaS when it comes to licensing and architecture. Software as a service (SaaS) is software deployed as a hosted service and accessed over a network, usually the Internet. Thereby, the customer does not purchase the software but access the SaaS application by using a subscription model – paying an ongoing fee to use the application.
Thus, the software is not hosted on the customer’s computer, but within the network. This will also enable you as a customer to access the internal data in situations when you are not in your office.
One prominent example for this service is the company pulsed (pulsed.com), who provides the access to internal data of a company for their mobile users. The customer is able to access and provide data over the Internet by logging on to the software with the computer or the smart phone. The consequence is a fast and save data transfer between all members of the staff involved, no matter where they are located. In order to protect internal data, a variety of security mechanisms can be used to keep sensitive data safe in transmission and storage. Furthermore, SaaS vendors provide application programming interfaces (API) for their customers which allow them to access their data easily and to create composite applications.
How will I benefit from using SaaS?
The advantages of using SaaS application are clear. Especially small and medium-sized businesses benefit from Saas, because there is no need for additional staff or maintenance of the software, nor for the purchase of new hardware. Instead of updating every single computer, the customer is able to update and maintain the software within the network. That means you as a customer will save time and money by using SaaS! Without SaaS it can cost hundreds of thousands of dollars for license costs, IT personnel and maintenance for the software for companies of any size. In using SaaS, the risk for such investments is drastically lower. Companies are able to try SaaS models with the often offered 30 days testing period and in case their needs are not satisfied, they can just walk away and try a new path.
The use of SaaS will furthermore have impacts on the work of the IT department of a company. In using SaaS, the daily tasks of the IT staff such as testing and installing patches, managing upgrades, monitoring performance and ensuring high availability will be handled by the provider of the SaaS application. Instead, the IT staff is able to focus on high-value tasks which support the business goals of the company. Therefore, their role will shift from mainly being reactive towards being active technology strategists. This will create improvements for your company!
What do I have to consider as a customer before using SaaS?
Many prospect customers of SaaS application are afraid about the consequences when their internal data is located outside their firewall. It would be irresponsible to ignore the risk which comes along with these circumstances. On the other hand, there are no evidences that the use of SaaS applications is more risky than using in-house solutions. As mentioned before there are various methods to secure you internal data in storage and transmission. In order to protect your data, you may wish to consider the following for any software or managed service contract: http://www.ecommercetimes.com/story/61448.html?wlc=1276261149
By subscribing to a SaaS application, internal data will be located outside the local network within the “cloud”. The integration architecture frames how this data is integrated with other infrastructural components. In many cases, this means to create data dependencies which demand data to be moved from the SaaS application and other in-house applications. In consequence, a consistent strategy for the coaction of SaaS models and in-house applications has to be developed.
What happens when I realize that the SaaS application does not satisfy the needs of my company after I subscribed to it?
In case the customer outgrows the software there is the possibility to discontinue the subscription. In such cancellation the customer usually maintains ownership of the data entered into the SaaS application. In conclusion the use of SaaS applications can be very beneficial for companies of any size.
SaaS models can save time and money like the example of pulsed.com mentioned above and they are a good-business option for your company. However, the risks have to be well considered and the decision whether to subscribe to a SaaS application or not should be based on sufficient information about the topic. Nevertheless, the relativ risk should not prevent you from joining in to this new development and from integrating SaaS application into your software strategy. This will eventually lead to a great advancement for your business!
For more information what to consider before using SaaS, see this article
http://www.prudentcloud.com/cloud-computing-technology/migration-to-cloud-top-10-checklist-24042010/
Sources
http://msdn.microsoft.com/en-us/library/aa905332.aspx
http://msdn.microsoft.com/en-us/library/aa905332.aspx
http://www.ecommercetimes.com/story/61448.html?wlc=1276261149
http://blog.riskythinking.com/2009/02/risks-of-saas-software-as-service.html