The Value of Software as a Service (SaaS) for the Travel Industry

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Maurice Hubert Singleton
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1 The Value of Software as a Service (SaaS) for the Travel Industry Published by Galor Systems & Software Development, March This publication may be distributed freely in its entirety. Content must not be changed. 1

2 Executive Summery This paper provides a comprehensive overview of Software-as-a-Service (SaaS) from the perspective of the travel market. Topics include a description of the SaaS business model and an explanation of how the service works. This paper brings to light recent market research regarding trends and mainstream adoption, along with an explanation of the specific advantages of a SaaS solution over on-premise applications for the travel industry. The paper concludes with important tips on how to choose a high-quality SaaS provider, such as finding a trusted industry expert with experience and a full support team, and always checking security services to ensure your intellectual property and data is protected. What is SaaS? Quite simply, Software as a Service (SaaS) is a service that allows you to outsource the technical aspects of your business. By finding a good SaaS provider, you can eliminate the worry about purchasing, installing and maintaining software or hardware, and focus on managing and expanding your business. The SaaS model is expected to become an important alternative - especially during a financial crunch - not only for larger companies but also for small and medium businesses with low budgets for IT. Since a traditional IT budget is made up of an IT team, SW licenses, and equipment such as servers, Saas offers a significantly reduced TCO (total cost of ownership). This is due to low cost of deployment, no expensive equipment purchases, and the ease and speed of implementation. As SaaS is often put into service on a pay-per-use basis, or subscription based on usage, this further reduces corporate expenditures. The right SaaS provider offers a business approach to ease your decision-making regarding IT and will reduce your budget. Implementing SaaS also eliminates the time spent for upgrades and maintenance. 2

This paper brings to light recent market research regarding trends and mainstream adoption, along with an explanation of the specific advantages of a SaaS solution over on-premise applications for

SaaS provider handles: Implementation Updating Troubleshooting Patching Monitoring & administration Backup and storage Upgrades and everyday support Eliminates need for software or hardware purchases

3 SaaS provider handles: Implementation Updating Troubleshooting Patching Monitoring & administration Backup and storage Upgrades and everyday support Eliminates need for software or hardware purchases including servers Mainstream Adoption & Market Growth Without a doubt, mainstream adoption of SaaS is growing in leaps and bounds, and is no longer considered a solution for early adopters or large conglomerates only. A recent THINKstrategies report (on behalf of Salesforce), entitled Why SaaS and Cloud Computing Solutions are the Perfect Remedy for Today s Scary Economic Times, demonstrated the significant turn in adoption for SaaS solutions. 3

bounds, and is no longer considered a solution for early adopters or large conglomerates only.

Additional data from Gartner's User Survey Analysis: Software as a Service, Enterprise Application Markets, Worldwide, 2008 demonstrates that SaaS is becoming more mainstream.

4 Additional data from Gartner's User Survey Analysis: Software as a Service, Enterprise Application Markets, Worldwide, 2008 demonstrates that SaaS is becoming more mainstream. 60% of respondents have used SaaS for more than two years, which is indicative of projects moving beyond a pilot stage to becoming a part of the respondents' enterprise application landscape. Moreover, 66% of respondents believe SaaS investments will increase, and new spending associated with SaaS is expected to increase. 4

60% of respondents have used SaaS for more than two years, which is indicative of projects moving beyond a pilot stage to

In a separate 2007 report, Gartner predicted a $19.3 Billion SaaS Market by 2011 with a compound annual growth rate of 17% for Small and Medium sized businesses.

5 In a separate 2007 report, Gartner predicted a $19.3 Billion SaaS Market by 2011 with a compound annual growth rate of 17% for Small and Medium sized businesses. Gartner predicts that by 2011, 25% of new business software will be delivered as SaaS. Market analyst IDC estimates that by 2011, this opportunity will reach $14.8 billion, representing a compound annual growth rate (CAGR) of 32%. Market analysis firm IDC recently published its market size projections for SaaS in 2009, given the financial crisis the harsh economic climate will actually accelerate the growth prospects for the software as a service (SaaS) model as vendors position offerings as right-sized, zero-capex alternatives to on-premise applications. Buyers will opt for easy-to-use subscription services which meter current use, not future capacity, and vendors and partners will look for new products and recurring revenue streams. 5

8 billion, representing a compound annual growth rate (CAGR) of 32%.

6 Benefits of SaaS vs. On-premise Applications for the Travel Industry Many tour operators and travel agents are small or medium sized businesses that have the need for computerized solutions, but not the budget to invest in hardware and infrastructure. Most would prefer to focus on successfully managing projects than worrying about purchasing, installing and maintaining software or hardware. Most small or medium sized tour operators operate with an IT budget that is made up of infrastructure, SW licenses, and manpower salaries. Monthly delays due to backup or system upgrades are times when the team is not able to work productively and must be taken into consideration. Integrating a SaaS based solution means finding a provider to alleviate the burden of maintenance, ongoing operation and support, and impacts business processes, administration and people. A good SaaS provider can offer a quick and significant ROI using a calculation based in factors such as benefits, risks, flexibility of the deployment, security and of course, cost. SaaS Deployment in a matter of days or weeks No upfront costs, pay-as-you-grow Minimal IT staff No SW licenses High security, low hassle No maintenance On-premise Deployment of months, or years Heavy capital investment in equipment, consultations and staff Large IT staff Renewal and purchase of SW licenses Security configurations needed, firewalls, etc Ongoing maintenance costs 6

in hardware and infrastructure. Most would prefer to focus on successfully managing projects than worrying about purchasing, installing and maintaining software or hardware.

7 How does it Work? SaaS is based on an open communication protocol so the software, which resides at a hosting facility, can interface with virtually any external system. Applications are accessed using a web browser or other web service, so all the user needs is an Internet connection. Pricing is generally based on system usage, with some form of ongoing royalty or subscription fees. This means that fees are controllable and can vary according to usage, so user determined budget according to amount of time spent on the system and applications accessed. Fees are typically based on active users within the system for a month or other defined period and include ongoing support and regularly scheduled software updates. What to look for in a SaaS provider? There are a number of elements to consider when evaluating a SaaS provider. Industry expert Ideally you want to choose a provider who is familiar with the travel industry. Familiarity with your specific vertical market ensures the solution that is tailored to your needs. Experience Finding a Saas provider with a solid customer base who can prove their capabilities. Team ensure the team who will be servicing your business knows the ins and outs of your industry. Support make sure your SasS provider includes implementation support, help desk, and training in your agreement. Security always check security services are included. This includes backup, recovery, encrypted data, firewalls, and unique ID and password access. 7

Pricing is generally based on system usage, with some form of ongoing royalty or subscription fees.

8 About Galor Established in 1989, Galor is a leading supplier of travel technology, boasting a client base of over 700 customers and innumerable users in 26 countries around the globe. Galor was founded on the belief that to promote growth in the global travel industry, sophisticated but simple technology must be accessible to all. Our vision is to upgrade the industry by introducing cutting edge technological solutions that answer the evolving needs of the market, reducing costs while expanding business opportunities. Based in Israel (the second Silicon Valley), our highly experienced international team of executives includes over 70 people focused on excellence in development, product application, customer support, training, installation & implementation, administration and finance. About Travel Booster: Travel Booster is a SaaS based end-to-end tour operator software with a complete suite of front, mid & back office tools. The product acts as a hub for a range of different services that include single components such as flights, hotels, cars, attractions and tours, as well as dynamic packages, static packages and shopping cart options. Members of the Travel Booster community can access the system over the internet anywhere and at any time and effortlessly load and manage their own content as well as integrate with GDS and third party interfaces. With an intuitive web based interface, Travel Booster includes all the tools necessary to handle reservation, operation, administration, and financials. 8

Our vision is to upgrade the industry by introducing cutting edge technological solutions that answer the evolving needs of the market, reducing costs while expanding business opportunities.

ABS Information Systems Inc. 307 Lesmill Rd, Toronto, Ontario, Canada, M3B 2V1 Phone: 416-449-4141 Email: sales@absinfosys.com

ABS Information Systems Inc. 307 Lesmill Rd, Toronto, Ontario, Canada, M3B 2V1 Phone: 416-449-4141 Email: sales@absinfosys.com How can small and midsize businesses that are relentlessly challenged by technology complexity and rapid technology obsolescence utilize a private cloud solution to thrive? Introduction 1 Growing with