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 can 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 quick deployment for many types of corporations and works particularly well within certain 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 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, the software is developed using the SaaS model because this delivery mechanism is a good fit for certain business operating models.
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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 buying software through conventional reseller channels. With the only financial responsibility in 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, the 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. Users run the SaaS application over the Internet. The application resides off-site at the vendor’s data center, 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.
Vendors can maintain an application 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. All customers are instantly upgraded simultaneously the next time the application is accessed.
In most cases, the software must be configured in an environment where customers can 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 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 can 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 adopting 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 keep them flowing. This need drives the SaaS vendor to provide a quality service in their application, along with quality customer service when needed.
Oftentimes, it is the latter quality that many traditionally licensed software platforms lack. Regrettably, with certain SaaS vendors, some of these companies are all about the customer upfront when the application is initially being deployed, only to essentially “forget” about the customer when it is time to provide some additional support. Obviously, forgetting about the customer is not in the SaaS vendor’s best interest.
It should also be noted certain enterprise software vendors often claim disinterest in developing SaaS applications, claiming SaaS is not able to provide the same level of sophistication inherent in their offerings. These vendors are underestimating the pervasiveness and agility of today’s SaaS offerings. Considering that enterprise software vendors generate significant revenues from upfront costs, the reasoning behind the expressed dissatisfaction becomes even clearer.
For small business owners, an enterprise software vendor may not be a viable option. For some vendors, it’s simply not cost-effective for large enterprise-centric SaaS vendors to support businesses with fewer than 10 end users. With the SaaS application offering, the level of customer service remains the same no matter how many users need access.
Benefits of SaaS Savings generated by relocating an application from the customer’s location to the vendor’s data center are easily observable in terms of reduced IT staff hours or employees and the associated hardware needs. Other generated savings and benefits of SaaS are not so easily observable, are subtle in nature, and can be far-reaching in their effectiveness.
These benefits are worth mentioning: o Delivery of standardized software applications across departments, business units, and the entire corporation. o Improved security and access to digital documents in-house and outside of the office via the Internet. o Comprehensive training supplied from the same SaaS vendors with a new subscription. o Ongoing customer support from the SaaS vendor continued throughout the term of the contract. o Reduced risk as opposed to retail-boxed licensed software. The software is always accessible, and you don’t sacrifice productivity time should a workstation have to be rebuilt and reinstall the software.
Anytime a business can embrace an improved operational process, cost savings are realized. Standards applied across the business environment reduce or remove variations in work performance. These variations occur when employees, perhaps located at different work sites or even departments within the same building, alter their work process when completing similar tasks. Defining standards helps your business succeed in the most cost-effective manner possible. Under certain operating models, SaaS improves these standards by requiring virtually all employees to access the same version of the software. The centralized application provides an access medium employees use to run the software at the office or remotely.
Access to files at the vendor’s data center (or, in some cases, a local workstation) is enhanced through SaaS. Centralized access using high-speed Internet connections improves the likelihood that documents will be easy to find. Security can also be improved by locating the documents off-site. Located on the vendor’s data center, your business documents are now maintained within the vendor’s security standards. Quality SaaS vendors usually have very high levels of security. Oftentimes, they use encryption to protect documents as the documents pass to and from the data center back to the user.
Note: Be sure to review the SaaS vendor’s security policy before signing any contract.
Training supplied by the vendor at the time a subscription is purchased another potential benefit of using SaaS. Reputable vendors provide training – after all, it is in their best interest to train customers to keep that constant revenue stream flowing. Customers will use the software if they know how to use it, and they can get what they need out of the application(s).
SaaS training can be tailored to your company’s specific needs. Extensive guides are both informative and easy to understand, and interactive help is readily available. Free trial periods are also common with SaaS vendors. During the free trial period, which usually lasts a few weeks or even a month or more, some vendors will take the time to train you on the software to acquire you as a client. In a service-based relationship established by the SaaS subscription, customer support continues as long as the subscription remains current. This is also essential for the vendor to continue the relationship. Remember, a SaaS vendor wants to keep you happy, and they know that quality customer service goes a long way to retain clients.