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SaaS: Software as a Service

Amy Wohl is a computer industry analyst who specializes in the commercialization of new technology. She has just started a blog on Software as a Service.

Spec Book Pro is Software as a Service.

Source: Amy Wohl's Opinions on SaaS

What is Software as a Service (SaaS)?

What does that mean?  It means that the software is implemented on one or more hosted systems and that new users simply set up their accounts, adding any necessary information and making personal (or organizational) choices from among the selections the software provides.  The new users select a payment method (typically credit cards for individual users and small businesses, more conventional purchase agreements for larger organizations) and the software is ready to use. 

This method avoids the need to justify capital expenditures for hardware and software, much less the wait for its arrival and implementation.  It also places the burden for support on the service provider, allowing the users' organization to tend to their business's primary focus, whether that's writing about technology (me) or building widgets.

Who Buys SaaS?

Customers from organizations of any size may be attracted to SaaS.

• Small firms like SaaS because it allows them access to software which might otherwise be too costly or complex for a smaller firm to implement or support.
• Big firms like SaaS because it permits nearly immediate Time to Value with no wait for justification or implementation.  It also avoids, as we've noted, capital expenditures and internal support costs.  Big firms often use SaaS to support ad hoc or short term projects; software which will be used only occasionally or by small numbers of employees,;applications which need to be available outside of the firewall to partners, contractors, suppliers, or customes; and support for smaller sites and individual remote users.

SaaS: Software as a Service

Investor's Business Daily (subscription required) describes the benefits of software as a service. Spec Book Pro is software as a service.

Source: Investor's Business Daily: Tiny Startups To King Microsoft All Extolling Software As 'Utility'.

Corporate customers benefit by having low upfront subscription costs. Users pay only for what they use. The providers assume all the hassle and risk of tech support and maintenance.

Even Steve Ballmer, chief executive of Microsoft, (MSFT) expects on-demand software, also called software as a service, or SaaS, to soon become the standard for business computing. That's quite a leap, coming as it does from the head of the world's largest software maker, almost all of it still conventional software.

The SaaS trend has opened up a range of options for customers. They like choosing the way they access software and the way they pay for it....

The Benefits of the Software as a Service Model

Spec Book Pro is software as a service.

Source: The Benefits of the Software as a Service Model.

When the Internet burst upon the scene in the early 1990's, the concept of software as a service (SAAS) seemed an idea whose time had come.

It got hyped along with everything else about the internet and reached a massive peak of inflated expectations in early 2000 as venture capitalists funded dozens of nearly identical companies that provided various SAAS solutions.

As venture funding dried up in mid 2000, the cracks in the SAAS model began to appear. The business plans assumed zero customer attrition, an uncompetitive landscape and IPO's in the absence of revenue. Disillusionment set in and 99 percent of those companies are no longer around. However, the strong did survive, and now, due to the success of companies like Salesforce.com and Rightnow.com, SAAS is back.

Analysts claim that by 2010, 30 percent of new software will be delivered via an SAAS model.

Variously termed "on-demand software", the "ASP" model, or "hosted software", SAAS is where you rent web-based software hosted at the provider's site. For many companies large and small, SAAS is the best way to rollout new technology. SAAS has now proven itself and is here to stay.

The staying power of SAAS has arisen for several reasons:

1. Low cost of entry. Instead of paying lots of money to roll out a complex solution across the entire company, customers can just roll out one test department of 20 people. The risk is very low if it fails, and they don't have to involve their busy IT staff.

2. Onus is on the vendor. If the vendor's software is broken, they won't be getting money from any customer for long. The company is motivated to fix the problem.

3. The vendor works for the buyer. Customers don't have to rely on their IT department to install an application. Everything is running securely at the vendor's location.

4. Less risky investment. Instead of spending $60,000 all at once, for example, customers pay for the software monthly - the monetary risk is lower and less scary.

5. Vendors must provide a secure data environment, or they're out of a job. Most vendors understand that data must be backed up religiously, and security is the top priority. Customer's IT departments are typically pulled in many directions and can't be as focused on one solution. Customers can rest assured their data security is probably better with a hosted solution, not worse.

Software as a service

Source: The ASP reincarnation - Computerworld.

Software as a service -- which typically eliminates hefty upfront license costs and requires little or no hardware or IT personnel to install, configure or maintain -- is growing in popularity among large corporations and small businesses alike. Last year's successful public stock offerings by fast-growing providers Salesforce.com Inc. and RightNow Technologies Inc. have shined a spotlight on a software delivery model reminiscent of the buzz surrounding application service providers (ASP) in the late 1990s.

Proponents of software as a service are quick with automotive metaphors for the traditional way of buying and deploying enterprise software: buying a $500,000 Ferrari while you can rent one just when you need to drive it, or buying a car in pieces -- engine, drive train, chassis, steering wheel and so on -- then putting it together yourself or paying a mechanic to assemble it for you.

"The ASPs of today are much more targeted. They identify a critical business need, and they solve it," agrees Frank Gillman, vice president of technology at law firm Allen Matkins Leck Gamble and Mallory LLP in Los Angeles. "So if you're a company that has that problem, you can solve it by writing one check and turning something on in two hours."

Spec Book Pro is software-as-a-service for interior design firms.

More on Software-as-a-Service

Source: Silicon Valley NORTH - SVN News.

In its purest form, SaaS is a single instance, multi-tenant software application that is hosted by the vendor. There are never multiple versions of software to support because all customers share the same, most recent instance of the application.

A SaaS software solution is built from the ground up to take full advantage of the Internet. Enterprise software upfront licence and installation fees, along with service and maintenance contracts, are replaced by pay-as-you-go pricing....

Companies that could never before afford enterprise software solutions can now afford them. Call it a mini revolution.

Compare purchasing software to home buying. Without mortgages, a homebuyer would need enough money to pay the entire purchase price upfront. Mortgages allow a homebuyer to put little money down and make a predictable monthly payment for a home that they could otherwise not afford. Even the little guy can buy a house.

SaaS executives view Software-as-a-Service in the same way. With no upfront licence fee, and a predictable monthly bill, small companies can take advantage of robust business applications that were once exclusively the domain of their larger competitors.

Another benefit is that a customer can be up and running with a new business application within hours, days or weeks... not months or years. Value and return on investment can be immediately measured.

Spec Book Pro is software-as-a-service.