Software as a Service (SaaS)

Software as a Service (SaaS) Software as a service, usually abbreviated to SaaS, is a way of delivering software applications via the cloud to your business, and so reducing your requirement for technology infrastructure and technical expertise.

Software as a Service (SaaS) Software as a service, usually abbreviated to SaaS, is a way of delivering software applications via the cloud to your business, and so reducing your requirement for technology infrastructure and technical expertise. As a component of Cloud Computing, SaaS is fundamentally reliant on high bandwidth connectivity between the user and the computer(s) on which the software is hosted. Superfast Broadband has therefore been key to the accelerated adoption of SaaS as a business model both for developers and businesses. Under the SaaS model, you no longer pay for software applications before downloading them to a PC or installing them from a CD. Instead, you sign up with a software supplier who supports the SaaS model or with a specialist SaaS firm, and then get through your day-to-day work using software that is held on their servers. Most of your data, too, will be stored by the service provider. The use of their software is charged for on a subscription basis according to usage. Functionally, your experience of working with SaaS should not be much different from using conventional software installed on your own PC. But the advantages that accrue to your business include much reduced responsibility for the nuts and bolts of technology, and a completely different cost model to normal software. Prominent IT brands active in SaaS include Google (with Google Apps) and Microsoft (with Office 365), but many other applications both well-known and niche are also available via SaaS. One of the most famous is Salesforce.com, an example of a major software provider which delivers its CRM applications as SaaS. If you ve written a blog or sent an email via a web service, you ve used SaaS. So many websites now offer SaaS applications that it s a part of many users everyday computing lives even if they ve never encountered the term. What Does The Technology Do? Software as a service is one implementation of the philosophy of cloud computing the provision of IT resources by a supplier over the internet rather than having them on your own PC or network. (The basics of this are explained in our guide on Cloud Computing.) The software application runs on the service provider s computers, and the user s PC is merely a means of accessing it. All it demands at the user end is a basic PC with a web browser and an internet connection, although in practice it is likely that users will continue to run some applications on their own Page 2 of 6

PCs as well as employing SaaS applications. Bare-bones PCs intended for remotely accessing services such as SaaS, rather than doing a lot of demanding computing themselves, are often referred to as thin clients. Although the service provider will probably be supplying the same software to many different companies, that doesn t mean they must all have it configured exactly the same way. A certain amount of customisation, affecting both functionality and the look and feel of the interface, is usually possible. For example, it may be desirable to have certain features disabled, or others added to users menus. Or you may even wish for the software to be branded with your company s own identity. Establishing the need for such customisation, and the scope that a particular service provider allows for this is one of the critical tasks in planning a move to SaaS and choosing a service provider. SaaS applications very often also include collaborative tools, such as the ability for users to discuss work. The fact that the technology requires them all to access software in the same place rather than having separate copies running on their individual PCs makes these tools a natural add-on. Examples of SaaS applications Representing just the tip of an ever-growing iceberg, these examples illustrate the wide range of applications that can be delivered via the SaaS model, and the involvement of big-name vendors as well as smaller specialists: Office/productivity: Zoho, Google Apps, Microsoft Office 365 Customer relationship management (CRM): SugarCRM, Salesforce.com, Microsoft Dynamics Business intelligence: Palo BI Suite, Adobe FormsCentral, Actuate BIRT ondemand Email/collaboration: Gmail, Microsoft Exchange, Zimbra Conferencing: WebEx, GoToMeeting, Adobe Connect Storage/backup: Microsoft SkyDrive, Carbonite, Box.net Database: QuickBase, Oracle, Amazon SimpleDB Online Accounting: FreeAgent, KashFlow, Xero Payroll: Able Internet Payroll, espay, Sage One Payroll What Business Benefits Can I Expect? Reducing costs SaaS can save you money, although whether it will and how much depends on some variables that we discuss below. What is certain is that it will change the cost model of software, and understanding this change is key to judging the financial impact that SaaS will have on you. Page 3 of 6

With conventional business software such as office applications you typically pay a relatively large sum up front and then have unlimited use of the software on one or more PCs, depending on the type of licence you purchased. Upgrades may be free or may incur a charge. Under SaaS, however, there are no big up - front fees. Instead, you will be billed by the service provider (usually monthly or annually) according to the number of users, the amount of computing resource that they consume on the service provider s systems, or a combination of both. This means that the cost of SaaS is ongoing. SaaS contracts are generally not long-term, so you are not tied into paying for something you don t use. When determining the impact of SaaS on costs compared with conventional software purchase, this means it is important to consider not only the headline prices, but also how many people will be using a given application, how often, and how heavily. The hidden costs of conventional software deployment, such as the servers, security measures and maintenance which will no longer be needed when you re using the SaaS model, must also be taken into account. Indeed, these can add up to more than the price tag on the software itself and although the SaaS provider also incurs such costs and has to pass them on to its customers, because you are sharing these resources with many others, you benefit from economies of scale. Reducing your IT maintenance and support requirements There are other significant advantages to SaaS apart from costs, too. One of the biggest is that it frees your business from responsibility for maintaining most of the IT systems necessary to provide users with the software they need. There will still be PCs in your office, of course, so you cannot do away with in-house IT expertise altogether but the burden of installing new application software, patches and upgrades, not to mention keeping the servers that host it up and running, now falls on the SaaS provider. This can open up a number of positive opportunities for you, as well as removing a management headache. You can start to use new applications much quicker than if you had to install them throughout your company; it s simply a matter of connecting to the SaaS provider, who already has the software up and running. As the service provide r is responsible for maintaining the software, you should also gain immediate benefits from the latest fixes and upgrades being installed without any effort on your part and of course you can expect the service provider s team to be experts in the particular software applications they offer. With these chores off your hands, you may choose to streamline your IT department, or you may prefer to redirect its focus so that it is providing added value to the business rather than simply maintaining infrastructure. Enhanced mobility SaaS can also make remote or mobile working more straightforward, as users can now access their application software and data from anywhere with an internet connection. Page 4 of 6

Getting Started Assessing your requirements Making an overnight leap from in-house IT to a completely SaaS-based approach is not typical. Instead, you should examine the burdens (in terms of time, human resource and so on, as well as costs) that each of the applications you currently use is placing on your business. That knowledge will help you assess whether moving to SaaS for a particular application would bring you benefits. Locating the right provider Sometimes the application is offered on a SaaS basis by the software vendor itself, or sometimes by a third party, often called an application service provider (ASP). Locating the providers that support the applications you wish to use will narrow the field quite a bit, but there are other issues to consider before you make your choice. Security considerations Security, data privacy and regulatory compliance are major questions for most users moving to SaaS. Realistically, a SaaS provider is likely to have better security systems in place than the average small business, but you will still need to reassure yourself that your data is safe in their hands and in transit across the internet to them. Do they have adequate backup and disaster recovery plans in place, bearing in mind that if their systems crash you would no longer have access to your application software and data? And do they comply with privacy and other data-related legislation that you need to abide by, especially if they are physically located in a different jurisdiction? Performance considerations Performance is another issue to take into account. Your short-listed providers should be able to give you a promise of uptime the percentage of time that their systems are properly running and available for use and, if you sign on with them, make this a guarantee in the form of a service level agreement (SLA). The SLA can also specify other aspects of performance such as connection speeds. Data migration and ownership As noted, the degree to which SaaS applications can be configured to your needs is also important, as is a clear understanding of what is involved in migrating your existing data, application configurations and so on to the SaaS provider and who is responsible for doing that. It is also worth checking how easy it will be to get your data back and change providers in the future in in order to take advantage of new developments in the rapidly evolving world of SaaS. Page 5 of 6

Top Tips Get a complete picture of all associated costs Identify all the costs that the software incurs, not just the price tag, to determine whether you ll save money through SaaS. Understand the cost implications over time Look at the cost impacts over different time periods to get a fuller picture. Look for flexibility Get the most flexible deal you can ideally, one that doesn t tie you in to minimum usage levels (and thus costs). Evolution rather than revolution Adopt SaaS one application at a time and learn as you go along. Consider interaction with other applications Scrutinise very carefully how a SaaS application will interact with other applications, whether they are also SaaS or running on your in-house systems. Third party enhancements Consider whether a SaaS provider supports third-party enhancements to software such as plug-ins, and whether you can benefit from these. The open source route may be an option Don t overlook open source SaaS software as a way to avoid being locked in to a particular supplier. For more information call 03000 6 03000 or visit: www.business.wales.gov.uk/superfastbusinesswales Keep up-to-date with Superfast Business Wales Page 6 of 6