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1 SaaS (or Software as a Service to give it s full title) has been around for a several years and it s the term used to describe the concept of running business software and data in the cloud. In this document we will explain what SaaS is, outline the different types of cloud and the key benefits of SaaS. Despite these benefits many companies still chose on-premise solutions - we explain why and answer some frequently asked questions.

2 2 80.3% 80.3% OF RETAILERS said implementing technology enhancements was the top strategy for addressing change through SO, WHAT IS SAAS? Basically it s a software delivery model where IT vendors host software and associated data on the cloud, so that the end customer doesn t need to buy, manage and run an in-house server. SaaS has become a common delivery model for many business applications and one of the largest growth areas for SaaS has been business software, particularly CRM & ERP/back office. SaaS providers generally price applications using a subscription fee, most commonly a monthly fee based on the number of users or transactions, so it s basically a pay-as-you-go model. This is very different than the traditional method companies use to buy software (known as on-premise ) where there is a significant capital expenditure to buy the software outright at the beginning of the project, hardware is installed in the customers offices and where the customer maintains the system themselves. The initial setup cost for SaaS is typically much lower than the equivalent on premise model and the ongoing costs are operational expenditure rather than capital costs.

3 3 WHAT ARE THE DIFFERENT TYPES OF CLOUD? As we ve already mentioned in the SaaS model, software is hosted in the cloud, and there are two types of cloud; public & private either of which can be used in the SaaS model. Public Cloud Basically a public cloud is where a service provider makes resources, such as applications and storage, available to the general public or to businesses over the Internet. The applications or storage are stored on a shared server. That is, shared with other users of the same product, often referred to as multi-tenanted. This is the model used for applications such as Dropbox or business solutions such as Microsoft CRM online. A public or multi-tenanted environment can be provided by huge multi-national companies such as Microsoft, Google etc or by smaller national suppliers who have space in secure data centres. The vast majority of SaaS solutions are based on a multi-tenant architecture. Private Cloud A Private Cloud is an on demand, configurable pool of computing resources providing isolation between the different organisations using the resources and is often referred to as single-tenanted. In effect companies are working on a 'virtually private' cloud (i.e. as if the cloud infrastructure is not shared with other organisations), and hence the name VPC. Again, this can be provided by huge multi-national companies such as Microsoft, Google etc or by smaller national suppliers who have space in secure data centres. At Maginus, we provide both public and private clouds for our customers to host their ecommerce Platform, ERP application or their whole IT infrastructure.

4 4 24.7% ranked cloud computing/ SaaS, and digital technology (24.3%), among the best enhancement options. WHAT ARE THE BENEFITS OF SAAS? For many companies there are significant benefits to choosing a SaaS model. Here are some of the top advantages of sourcing IT services in the Cloud: LOWER CAPITAL EXPENDITURE In the traditional software model companies typically buy licences and hardware at the beginning of the project as a capital expenditure. Choosing a SaaS model allows them to move this chunky capital expenditure to regular (typically) monthly operational expenditure. REDUCED RUNNING COSTS One of the biggest selling points is the potential to reduce IT support costs by outsourcing hardware, software maintenance and support to the SaaS provider reducing internal costs for both people and the capital expenditure on hardware and networks. ACCESS TO OTHERWISE UNAFFORDABLE SOLUTIONS Because of the monthly payment model, SaaS can make aspirational software available to companies that don t want to or can t afford the capital expenditure costs of the on-premise model. This is particularly useful for smaller companies with significant growth models as it means they can implement a more sophisticated application early, which they can grow into and which removes the need to change application when the company has grown. MORE FLEXIBILITY & SCALABILITY SaaS is a more flexible model, ideal when your company is expanding (or rationalising) or you have seasonal peaks. The system can scale up or down without the need to buy extra hardware & licences for example. EASIER INTEGRATION As these solutions are in the cloud they typically offer very good integration protocols, so it is (relatively) easier to integrate with other applications eg credit card processing, supplier feeds, web services, address look-up etc. QUICKER ACCESS TO INNOVATION SaaS applications on the Public Cloud are often updated more frequently than traditional software, which means that companies using such applications have all the latest capabilities.

5 5 36.1% 36.1% OF RETAILERS believe mobility is the most significant technology enhancement for redefining/ refocusing their businesses over the next few years. SO WHY DO COMPANIES STILL WANT TO BUY ON- PREMISE APPLICATIONS? Despite the benefits in terms of costs, availability, flexibility etc many companies still choose to buy on premise applications. There are a number of reasons why, including: If budget isn t a problem, some companies feel that the Total Cost of Ownership (TCO) over the longer term (ERP solutions, for example, are typically changed every years) will be less with an on-premise model Their corporate governance might dictate that they must own business critical applications The multi-tenanted SaaS model limits the customisation of applications. Many companies feel they must have the flexibility to develop the application to ensure it fits their business Some applications might require integration with large volumes or sensitive customer data. If this is the case, integrating them with remotely hosted software can be costly or risky, or can conflict with data governance regulations. Organisations that adopt SaaS may find they are forced into adopting new versions, which might result in unforeseen training costs or an increase in probability that a user might make an error.

6 6 FAQ'S When companies haven t used SaaS before they often have concerns and these are the questions we re asked most frequently: Will the availability & performance be as good as an on-premise model? Internet connections are typically the weakest link in the SaaS model. But the quality and availability of internet access has moved on in leaps & bounds in recent years. In addition, SaaS providers provide SLA s (service level agreements) which guarantee a very high level of availability & performance. They monitor performance and because they re the specialist they will pro-actively tune the application so it s performing to the optimum. The SLA s will ensure that availability and performance is comparable with on-premise solutions. Will I be able to customise the system? This depends very much on what type of cloud the system is provided on. If it s a private cloud this will allow changes to be made in much the same way as on-premise systems. If it s a Public Cloud then the options for modifications will be restricted. So, if you want to be able to customise the application it s always better to be in a private cloud. If you re happy to keep within the standard application and just make simple customisations eg change field name, add user defined fields then most applications on a public cloud will allow you to do that. In the SaaS model is my data secure? As SaaS is a relatively mature model, there shouldn t be concerns around security. Internet connections to SaaS services use sophisticated internet security protocols. Can I protect & insure my data? SaaS data escrow is the same logic as source code escrow. It allows companies to protect and insure all the data that reside within SaaS applications, protecting against data loss. Where are the backups? This is a common concern. For on-premise solutions backups are taken daily and held off site or there s an automated backup. Within the SaaS model there s a clearly defined backup strategy with real-time back-ups held on different servers. During the implementation process and after go-live the restore process is tested and maintained. Will the costs go up when I m locked into a contract? The simple answer is that the contract will stipulate the costs and state the maximum increases that the supplier can add, so there won t be any nasty surprises in the future.

7 15 ABOUT MAGINUS Maginus Floats Road Roudthorn Industrial Estate Manchester M23 9PL Maginus Software Solutions has over 20 years' experience delivering technology-led business change projects to multichannel retail, wholesale distribution and ecommerce businesses. Maginus are leading providers of multichannel, business management and ecommerce solutions. Our skills and capabilities stretch from online store to back office, hosting to digital marketing. As such the depth and breadth of our expertise is unrivalled. We pride ourselves on the quality of our staff who have helped us to build a solid reputation as a trusted, long term partner for providing high quality advice, delivery, support and customer service.

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