Software As A Service
Definition: Software as a Service (SaaS) is a type of
computing offering where users access internet-hosted software applications
using a browser rather than a traditional client or client-server based
SaaS and Cloud Computing
SaaS is the most easily understood variant of
computing with applications such as webmail and Google Docs perhaps the best
known examples. In fact most of the so-called Web 2.0 networking applications
such as Facebook, YouTube and MySpace could be categorised technically as SaaS
As an example, compare the difference between using webmail and client-based
email applications such as Microsoft Outlook, Lotus Notes or Eudora. With a
PC-based client the users preferences and settings are all tied to their PC, and
emails are usually copied down to it as well. Emails are stored somewhere that
most users can't find and moving them from one PC to another requires a
significant degree of IT knowledge.
With a webmail client all you need is a PC and an internet connection to link to
your webmail provider and all email, past and present, all contact details and
settings are available straight away. There's no link to any one PC so anything
that can be done from the user's usual PC can be done from a colleagues PC or
from an Internet café.
SaaS in a Business Environment
These well known consumer applications are not often referred to as SaaS
applications though. The term tends to be used more in the commercial software
space where there is a different relationship between the user and the SaaS
provider. This is usually characterised by payment being made to use the service
and the payment model being of the 'pay-as-you-go' (PAYG) type.
The major financial difference SaaS offers an enterprise compared to a
traditional internally hosted application is the ability to pay for application
software on an 'as-needed' basis. An enterprise-quality software application
would traditionally be offered in batches of licenses such as 1-10, 10-50 etc.
This means that enterprises have to pay up front for software, often before they
have the people to really justify it.
Pay as You Go
With the PAYG model and the software and data hosted on servers in the
an enterprise can simply pay an application provider an amount per user per
month, or perhaps the number of minutes used per month, depending on the type of
application and the precise model that the SaaS provider is operating. There are
far less IT management overheads as when operating servers to host a company's
own copy of an application, all that is required are PCs with a browser and an
An enterprise SaaS also offers all the benefits of consumer web-based
application in that all the data is centrally hosted so that it can be accessed
from anywhere. Another secondary benefit is that the PCs in an enterprise do not
have to be particularly powerful as all the high-powered computation is done on
the application provider's servers.
Startups and SMEs Profit Most
This is all of particular benefit to startups and growing SMEs as it all means
lower costs, immediate access to a fully-fledged application and fewer resources
wasted on maintaining a computing environment. Companies in these situations do
however need to be aware that they will be tied into that application provider.
They should monitor costs as they grow to ensure that they don't pass a
breakpoint where a traditional model is more cost effective.
A good example of commercial SaaS is Salesforce.com's web-based customer
relationship management (CRM)
system. Installing an organisation-wide CRM system using a traditional local
hosting model can be a real headache, with a lot of up front expense to install
and maintain hardware, operating systems and the application itself, which then
has to be tailored to the organisation. To use a web-based CRM all that
employees need to do is register and login to the central system and import any
existing customer data. Salesforce.com's application is available in four levels
from basic to unlimited at a range of prices per user per month.
This all sounds like it's too good to be true, surely there are disadvantages to
SaaS? Many companies are concerned about not being able to control their own
risk to the organisation of having a third party company in charge of their
data, with concerns about privacy and data piracy, is considered too great for
many companies to embrace cloud computing in general and SaaS in particular.
There are operational concerns too. For a company to lose it's Internet
connection is currently a great inconvenience. For an organisation using an SaaS
model, losing their Internet connection becomes a complete
disaster so steps would need to be taken to provide backup connections. This
all increases telecommunications costs.
With the advent of mobile internet connections it becomes harder to imagine a
business person being somewhere where there is no Internet connectivity but it
does happen. Once employees get used to working in an 'always-on' environment
they find it harder to be productive when they are suddenly disconnected.
Strategically, the SaaS model presents some problems in addition to the tie-in
to a supplier mentioned above. Suppose an SaaS provider begins to get overloaded
and is slow to put more resources online; that would result in slower
performance for their customers. Smaller customers are likely to feel the pinch
as larger customers are prioritised and his might also happen with customer
Although it might not be a stated policy of an SaaS provider to downgrade
support for smaller customers it is easy to understand that customer service
personnel might inadvertently or even subconsciously put more effort into
responding to larger customers.
Organisations are often reluctant to allow control of significant
processes to pass outside their own walls, sometimes with good reason.