Software as a Service (SaaS) Today’s business world demands that business owners quickly adapt to a changing environment. Businesses can improve internal operations when they are able to adapt to emerging technologies trends to reduce operational costs and ultimately improve service to clients. Businesses that fail to adapt find that attempting to function using old, supposedly tried-and-true methods and technologies can cost them significant amounts of money.
When deployed correctly, Software as a Service (SaaS) can help your business reduce overhead costs associated with managing software installed and maintained on servers and client workstations. Software as a Service, also known as “software on demand” provides for quick deployment for many types of corporations and works particularly well within certain types of business operating models. Evolution of Software as a Service (SaaS)
SaaS began with the development of hosted software space that first appeared commercially in 1998. These first-generation SaaS applications were applications that allowed Web-based access to software through a subscription from the SaaS vendor as opposed to traditional application licensing for software purchased “off-the-shelf.”
The licensing model encourages software vendors to restrict the use of their applications by objectively defining how and when the application software can be used. The EULAs (End-User License Agreements) define precisely how an application can be used.
With SaaS, conventional CD software installation onto a workstation is completely done away with, and customers are granted full access to the application from their desktop PC. The PC essentially becomes a “thin client” when using SaaS; virtually all access functions are executed on the vendor’s server in a remote data center. Basically, the desktop PC becomes a client and the vendor serves up the application(s) on demand; hence, SaaS is basically software on demand.
At first, only certain companies were eager to adapt to SaaS. However, this group of companies made waves in their respective industries by becoming operationally effective when using SaaS. Today, more often than not, software is developed using the SaaS model because this delivery mechanism is a good fit for certain business operating models.
SaaS is rapidly becoming a preferred delivery vehicle for corporations around the world. In certain instances, business owners are particularly happy with the total cost-of-ownership savings of the SaaS solution compared to that of buying software through conventional reseller channels. With the only financial responsibility in the form of a recurring subscription fee, costs are constant and predictable with SaaS. As many business owners know, this is not the case with perpetually licensed out-of-the-box software. By the third year of ownership of licensed software, total cost of ownership increases because many vendors are pushing for new hardware equipment and other upgrades to your IT infrastructure.
Software as a Service (SaaS) Defined SaaS is just what the term implies: Software is supplied as a service by the software vendor. The application resides off-site at the vendor’s datacenter where the vendor is responsible for maintaining the data, servers and all other related hardware. Access to the remotely located application is granted by a subscription that allows end users to utilize the software. Users run the SaaS application over the Internet.
Vendors are able to maintain an application call center software that works for multiple clients without considerable customization or integration issues. With traditional enterprise-level applications, this is not the case where many costs are generated customizing an application for a particular company. With SaaS, those costs are eliminated and the vendor has a single, easy-to-maintain application for multiple clients. Upgrades are a snap as is releasing new versions. When the vendor needs to upgrade its application or release a new version, it simply installs it in their data center, and all customers are instantly upgraded simultaneously the next time the application is accessed.
In most cases the software must be configured in an environment by where customers are able to access multiple applications simultaneously. SaaS is also known as a “one size fits all” kind of solution. By maintaining the hardware, vendors assume much of the operational IT costs associated with maintaining the software and servers that run the application(s). Transitioning to SaaS at your company could save your organization a lot of money by shifting these operational costs over to the SaaS vendor. Doing so eliminates the number of IT hours necessary to maintain the software running in-house on workstations, plus it reduces hardware costs for additional servers and other related equipment.
Shifting these responsibilities to the software vendor changes the customer-vendor relationship. Obviously, firms able to take advantage of SaaS are able to dramatically reduce operational costs and enable IT staff to focus on higher-order tasks within their organization. The SaaS platform also differs radically from traditional licensing methods in how the software is paid for. Gone are the large upfront costs with various consultancy fees and maintenance costs associated with adapting a new application company-wide. Instead, customers pay a subscription fee that may occur on a monthly or annual basis.
SaaS software vendors make the trade-off for the upfront fees for a predictable, steady cash flow from a service-based relationship with the customer. Keeping the customer relationship intact is essential for the SaaS provider to maintain these revenue streams and to keep them flowing.