A few months ago a dear friend of mine bought a house in New Delhi. It was a house with 3 bedrooms, a decent sized living room and a huge backyard. The backyard was almost thrice the size of the house. Well, it would be a good place to play soccer. Except that he had a different plan. He wanted to set up a power generation unit there to feed electricity to his house. Sounds hysterical? Well, it is. Is the story real? You bet no. Is the message of the story real. You bet it is. Most enterprises who would retrospect would be able to draw an analogy.
Many enterprises irrespective of their core business would set up an IT division to take care of their IT needs. They would have their own mail servers, their own spam filters, loads of nodes connected together with routers, load balancers, support staff and huge costs. Could you draw an analogy with my virtual friend setting up a power plant? Would he be better off getting power from a utility company rather than setting up his power plant? This would enable him to focus on his house and delegate the rest to the power experts. This would also help us to use his backyard for soccer.
So who are the utility providers for software?
First let us understand SaaS.
Software-as-a-service (SaaS) is a model of software deployment where software is provided as a utility. The utility is provided as a service to customers across the internet. You can think of the SaaS as “renting” the software to customers who access it remotely. The SaaS provider might host the application on secure servers that it owns, operates, and maintains or may build the software on a PaaS platform like SalesForce or Google App Engine.
Advantages of SaaS
- Reduced Cost
SaaS is delivered to organizations as a subscription model, usually billed on a per user per month basis. This means that the costs are granular in nature and are incurred only as long as benefits are achieved. This is much less than an on premise license based model where software is procured.
- Reduced Overheads
SaaS provider hosts the application. Investing in expensive infrastructure is no longer required. All large initial investments on hardware, licenses, databases, ongoing overheads of employing and training IT staff, software and hardware maintenance and upgrades are managed by the SaaS provider. Customers can access and use the application on the Internet through any browser.
- Multi-Tenant Efficiency
A SaaS provider would generally share its infrastructure and expertise across a large number of customers. This drastically improves implementation speed and cost effectiveness over a standard ASP model.
- Flexible Scale
SaaS gives the customer the freedom to adapt to the changing usage of the software. You can buy the application for two employees to start with and then after a few months decide to adapt it for a department of 8 people, once you feel comfortable, the software can be rolled out to the entire organization. Likewise when you feel that the demand is diminishing, you could scale down.
- Increased Accessibility and Productivity
Since the data is available on the Internet, it is easily accessible anywhere thus increasing collaborative productivity.
- Easy to get onboard
Since, the solution is delivered via the Internet, Software as a Service completely eliminates installation and setup at the customer’s end. Users can be up and running very quickly.
- Better Security
SaaS vendors understand that one of the most used pitch against the model is data security. I would say that security is overrated but the debate is probably the topic of another post. SaaS vendors would ensure that the data is backed up religiously and information security is of high priority. To draw an analogy, consider the SaaS vendor as a bank. You are putting money in the bank with the expectation that bank would ensure that your money is safe. Imagine, what kind of security would you have to implement to match the security processes employed by a bank. The SaaS vendor would do those for you.
- Continuous innovation
SaaS would innovate constantly. These innovations are made immediately available without the need for re-installing or re-configuring.
- Lots of options
The Software as a Service model gives the customer the freedom to easily make the switch from one solution provider to another.
- No on premise software
SaaS based solutions are hosted centrally with the service provider. No software to be installed at the customer’s premises. The software can be accessed on the Internet via a browser only. On Demand applications can be used by Windows, Linux or Mac users, providing true platform independence.
- and the most important, leads to business focus!
Helps organizations focus on the main business needs. Also helps them to direct limited in-house IT resources towards more business oriented initiatives.
Disadvantages of SaaS
I would be wrong to say that SaaS is a silver bullet, there are still some questions which would come to your mind before you take the leap. Again, the advantages, far far outweigh the concerns but these are some of the concerns that enterprises have before they move to SaaS.
- Enterprises feel a sense of lost control when it comes to handing over your data and information.
- Some vertical markets require industry specific business applications for which SaaS solutions are not available. Most SaaS software today is built for mass consumption or in better words is built for common cases.
- If the SaaS vendor disappears, what happens to the enterprise data.
- Organizations without clear objectives and defined business processes will be no better off with a SaaS solution than with an on-premise solution.
I would recommend that whenever you have concerns, compare the SaaS vendor to your neighborhood bank. Can you set up all the services provided by the bank on your own. Would your money be more secure in your locker of your house (on premise) as compared to the bank (SaaS).
What are the right services which could be SaaS’ified?
In my view, anything which is not your core business should be delegated.
As a company focussed on the cloud, Inphina does not own a single server and we intend to keep it that way. We are SaaS enabled for our website hosting, payrolls, wiki, intranet, blogs, documents, calendars, timesheet management, invoicing, data storage etc.
Likewise, if you are a software development and consulting organization, would you rather spend your time on managing spams on your mail server or build software for your clients? If you are a medical organization, would you rather spend your time on your core practice of medicine or build and maintain you own server farms? If you are an enterprise designing and manufacturing garments, why would you like to spend time and money on buying off the shelf invoicing software which you would have to install, maintain, trouble shoot, take backups?
As we read this, one of the big medical establishments in India has already moved to the cloud.
So, the next time when you come up with investing time into something which is not your core business, think twice before you embark on setting up the power plan. After all the space could be used for playing soccer.