On-Demand Software as a Service [SaaS]

On-Demand Applications, also knowns as Software as a service [SaaS] is a software application delivery model where a software vendor develops a web-native software application and hosts and operates [independently or through a third-party] the application for use by its customers over the Internet.

In 2006 SaaS was under the spotlight "is SaaS really the next big thing and are there natural limits to growth for the phenomenon". An Infoworld[March 20th 2006 cover story] claimed:

”..SaaS ecosystems are emerging .... All this activity, however, does not mean the SaaS wave is poised to engulf traditional licensed software.

SaaS’s share of the business application market today is more like a drop in the bucket. And enterprises have been slow to embrace SaaS, raising objections over reliability and availability, underscored by recent Salesforce.com outages.

Yet the arrival of big enterprise software guns, the emergence of integrated business communities in the cloud, and the increasing desperation of on the part of IT to minimize application deployment and maintenance hassles suggests that SaaS is on the verge of much faster adoption.” This prognosis has all the sounds of Field of Dreams, many time replayed with very mixed success in the IT business - “if you build it they will come”.

Only two years on, SaaS is one of the fastest growing segments of the IT industry. One of the main reasons for this is because it provides a more cost-effective alternative for enterprises to achieve their business objectives than traditional packaged applications. In addition, SaaS simplifies applicaiton deployment, reduce implementation time, as well as allows developers to support many customers with a single version of a product.

As organizations continue to adopt models for automating their internal business processes, the SaaS model is becoming more attractive for many service providers as well as independent software vendors.

Access

Customers do not purchase the software, instead paying only for its use.

Access to the applications is provided through a web-based API using Web Services or REST.

Market

SaaS is generally associated with business software and is a lower cost way for businesses to enjoy the same benefits of commercially licensed, internally operated software without the associated complexity and high initial cost.

It was initially targeted at small and medium-sized businesses that do not have the in-house resources to manage enterprise applications. However, larger corporates are also embracing the many advantages of the SaaS model.

SaaS Applications

Many types of software are well suited to the SaaS model. Those most commonly sought are:

• Customer relationship management [CRM]
• Video Conferencing
• Human Resources
• IT Service Management
• Accounting
• Email

ASP versus SaaS

The distinction between SaaS and earlier ASP applications delivered over the Internet, with HTML frontends added as an afterthought, whereas SaaS solutions have been developed specifically to leverage web technologies such as the browser, thereby making them web-native.

ASP or application service providers host applications provided by software vendors, running it for customers in a secure, uniform environment. The customer merely has to accept what is offered.

SaaS focuses more on what the customer wants rather than what the vendor could give. SaaS vendors use a multi-tenant architecture, meaning that multiple customers are running the same software, but with a virtually separate data. ASPs by comparison, deploy one application instance on a server for each customer.

Multi-tenant architecture simplifies application management for the vendor, as well as simplifying the value for all customers; upgrades are instantaneously available across the entire platform.

More recently, both SaaS and ASPs are moving towards using virtual environments for each user\customer. This involves a separate instance of each application for each user.

Virtual Desktops

The lastest advance in the SaaS model is the virtual desktop infrastructure [VDI].

Next: Key Characteristics of SaaS Solutions

Back To Top

On Demand Index | Key Characteristics | Selling SaaS | Channel Model | Sales Model | SaaS Billing | Application Streaming