SaaS is an acronym for Software as a Service.
SaaS is an outsourced service offering in which a service provider hosts one or more software applications that can licensed to and used by many different clients with their data securely partitioned.
Traditionally if you need to use software, it is installed on your desktop PC and/or on your company’s servers. With SaaS, the software is installed and run on the service provider’s infrastructure. This not only avoids the need for the infrastructure to run and support the system, it also takes on responsibility for upgrades, backups and data storage.
SaaS service providers can provide just one application through to complete application suites.
SaaS services are usually browser based and accessed by the Internet or in some cases, by a private network.
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What is the relationship between Cloud Computing and SaaS ?
Cloud Computing is a generic term that describes shared computing resources that can be dynamically scaled according to business requirements, faster than traditional computing environments.
SaaS is one delivery model of Cloud Computing. Refer to these articles for information about other delivery models: IaaS (Infrastructure as a Service), PaaS (Platform as a Service) and DaaS (Desktop as a Service).
Service delivery options
SaaS is offered through a number of different delivery options, such as Public cloud service, Private cloud, Hybrid cloud and managed cloud.
Refer to this article about Cloud Computing for further information.
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What are the benefits of using SaaS ?
- The up-front cost of introducing the business system into your company is reduced, because the usual capital investment in hardware and software is replaced by a monthly ‘usage’ charge. The economic benefit of this should be verified, taking into account the number of users, data volumes and expected period of time that the system will be used for.
- The cost of using the system (should be) less than the cost of hosting it yourself, when taking into account all the infrastructure costs such as hardware, backups, contingency provision and ongoing upgrades and maintenance.
- If you have a requirement for mobile users to access the business system from anywhere in the world.
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What should I be aware of before using SaaS ?
- Perform due-diligence on the supplier to ensure they are financially stable and have security and operational policies and procedures in place that are at least as comprehensive as those of your company.
- Ensure you know where your data is. Many companies have a legal and regulatory obligation to know exactly where their data is.
- Ensure you know who has access to your data at the service provider. You don’t want a disgruntled employee of the service provider taking a copy of your client database.
- Ensure the data is encrypted on the service provider’s servers and on their backups.
- Ensure the backed-up data is available for you to recover from as a result of an issue caused by your company. For example, many cloud service providers perform regular backups, but will only restore if they suffer a problem. This won’t help you if you accidentally delete some of your data.
- Ensure you understand the legal and regulatory requirements that you must comply with. For example the retention of month-end backups.
- Ensure the application is configurable to meet your needs ‘out of the box’. It is unlikely that you will be able to have a bespoke development just for your own use.
- Understand how upgrades to the software are applied and whether you have the opportunity to train on the new version before it is implemented for live use.
- Understand how the system and its security will be integrated into your company’s existing infrastructure.
- Delivery of the service is totally dependent on the performance and stability of the network. Make sure that both the company premises and the hosting provider have sufficient capacity and diverse routing to cope in the event of a failure.
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What is the financial impact of using SaaS ?
Financially, the significant difference of Cloud Computing is that it is typically charged on a pay-as-you-use basis. The cost of is therefore an operating expense instead of a capital investment. This may suit many companies, as they can very quickly get access to a business system for no capital outlay and the cost is charged monthly.. However, tight control needs to be kept on the use of the services, as it is easy to expand and hence increase ongoing charges.
Charges are typically based on a monthly fee and the number of users or transactions processed.
Before committing to the service, ensure you understand how you would be charged if usage increased within your company, such as more users or an acquisition.
Watch-out for a network traffic charge. Often this is capped at an amount per month. If your Cloud Computing has public access, the network usage could be out of your control and you could end-up paying an excess network usage cost.
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Examples of SAAS
Examples of SaaS are Google Mail, Salesforce.com CRM and ProofPoint e-mail archiving.
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Do I still need an IT capability in-house ?
The quick answer is yes. Most SAAS offerings are for a single business system and it is unlikely that all your needs will be met by one SAAS service provider.
It is possible to ‘mix and match’ (mash-up) different applications from different SaaS providers, which would reduce, but not remove the need for a company’s server-side infrastructure. The role of IT changes to be less engineering focused and being closer to the business.
Also read ….
- Cloud Computing – what is everyone so excited ?
- Infrastructure as a Service (IaaS)
- Platform as a Service (PaaS)
- Desktop as a Service (DaaS)
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Resources for CIO and COO Professionals
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© Copyright Tim Bullock 2010
Thanks for mentioning Proofpoint in your post! Agree with your assessments for the most part, but wanted to also note the following, vis-a-vis cost savings from SaaS and the continued need for on-premesis IT (these are points made by Osterman research in the whitepapers we make available at http://www.proofpoint.com/tco):
“1. Of the costs associated with managing a security infrastructure, labor is the
only cost that will continue to increase over time. A SaaS security solution’s ability to
eliminate most of the labor involved in managing security will have increasing benefits
over time as labor rates increase. This is a particularly important consideration in
markets with very high labor rates.”
BUT, this doesn’t mean that you can, should or will reduce actual headcount in your IT organization. On the contrary, your organization can take better advatage of the IT labor resources it already has. As Osterman notes:
“Second, the significant amount of labor that is freed up as a result of using a SaaS
provider means that this IT staff time is now available for other projects and initiatives
that can provide more value to an organization. For example, using additional IT staff
time to improve an organization’s customer service experience or shorten account
receivables wait times could be a much better use of these IT resources than managing
spam filters and other parts of the security infrastructure.”
Think this blog is pretty interesting and wondering who is behind it! Feel free to contact me via the email address I provided. Would love to know more about your future plans for this blog.
Best Regards,
Keith
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