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Software as a Service (SaaS)

Software as a Service (SaaS) . Does it make Cents? by Brian Moore. Contents. Brief Background information SaaS Architecture Financial Consideration Case Study Conclusion Q & A. Intro to SaaS - Definition .

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Software as a Service (SaaS)

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  1. Software as a Service (SaaS) Does it make Cents? by Brian Moore

  2. Contents • Brief Background information • SaaS Architecture • Financial Consideration • Case Study • Conclusion • Q & A

  3. Intro to SaaS - Definition • Software as a service (SaaS) is a model of software delivery where the software company provides maintenance, daily technical operation, and support for the software provided to their client. • It assumes the software is delivered over the internet. • Software delivered to home consumers, small business, medium and large business

  4. Intro to SaaS • The web as a platform is the center point • Web-browser acting as a thin-client for accessing the software remotely across the internet. • Network-based access to, and management of, commercially available (i.e., not custom) software • application delivery that typically is closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics

  5. SaaS - Pros • Stay focused on business processes • Change software to an Operating Expense instead of a Capital Purchase, making better accounting and budgeting sense. • Create a consistent application environment for all users • No concerns for cross platform support • Easy Access • Reduced piracy of your software • Lower Cost • For an affordable monthly subscription • Implementation fees are significantly lower • Continuous Technology Enhancements

  6. SaaS - Cons • Initial time needed for licensing and agreements • Trust, or the lack thereof, is the number one factor blocking the adoption of software as a service (SaaS). • Centralized control • Possible erosion of customer privacy • Absence of disconnected use

  7. SaaS Architecture • Fueled by • Bandwidth technologies • The cost of a PC has been reduced significantly with more powerful computing but the cost of application software has not followed • Timely and expensive setup and maintenance costs • Licensing issues for business are contributing significantly to the use of illegal software and piracy.

  8. High-Level Architecture • There are three key differentiators that separate a well-designed SaaS application from a poorly designed one • scalable • multi-tenant-efficient • configurable • Scaling the application - maximizing concurrency, and using application resources more efficiently • i.e. optimizing locking duration, statelessness, sharing pooled resources such as threads and network connections, caching reference data, and partitioning large databases.

  9. High-Level Architecture (con’t) • Multi-tenancy – important architectural shift from designing isolated, single-tenant applications • One application instance must be able to accommodate users from multiple other companies at the same time • All transparent to any of the users. • This requires an architecture that maximizes the sharing of resources across tenants • is still able to differentiate data belonging to different customers.

  10. High-Level Architecture (con’t) • Configurable - a single application instance on a single server has to accommodate users from several different companies at once • To customize the application for one customer will change the application for other customers as well. • Traditionally customizing an application would mean code changes • Each customer uses metadata to configure the way the application appears and behaves for its users. • Customers configuring applications must be simple and easy without incurring extra development or operation costs

  11. Saas Financials • 4 ways software companies are pricing their products • Open Source – free basic products but charge a fee for the upgrade to the premium product (i.e. Apache, Linux, etc) • License software – main way its being done. Customer like this way because they own the software as an asset • Leased Software – deployed at customer site but leased for a time period. Used in the days of the mainframe • SaaS – subscription pricing. Like leasing is considered and expense but upgrades and maintenance is free and seamless

  12. Saas Financials (con’t) • Legal should be involved in the acquisition of mission-critical SaaS software • Companies are losing control of their data in the SaaS model • Depending on the service provider for security and data access. • Need to setup contractual relationship with the SaaS provider • Setup escrow account • With conditions of being able to run application in house • Ability to move data from current provider to new location • Also Service Level Agreements (SLAs) for • Availability, response times, notifications of outages • Data integrity, data privacy, frequency of backup, support and disaster recovery

  13. Saas Financials (con’t) • CIO decides if SaaS software will benefit IT while CFO decides if it is economical for the whole firm • Leasing vs Buying • Similar to decision of leasing or buying a car • Need to compare costs that effect cash flows such as depreciation, interest on financing, tax and opportunity cost • Use an experience Accountant

  14. Case Study - Software4Rent.biz • Software4Rent.biz provides casual or long term software application rental, enterprise wide software deployment and management • Offerings • No contracts to sign - rent for as long as you want • Manage, deploy and track leased software resources more effectively in real-time. • No cost software upgrades • Can 'Top up' at minimal cost in times of peak software use • Systems administrators can allocate application software to users in real time • Change the allocation of licenses as required and reduce the number of licenses that the company needs to buy. • Save work to local hard drives, or on their servers if you are a pay by-the-month user. • Allow users to rent software on an hourly, daily, weekly or monthly basis

  15. Software offering & Pricing Future shop Microsoft Office Word 2007 $309

  16. Cost Per Usage Chart of MS Word

  17. Conclusion • Get over initial hurdles • Adopting SaaS in the enterprise has to be analyzed for economic and efficiency reasons • A lot of initial planning and negotiating with the solution provider- security, data access, legal, etc • Long term Benefits • Easy Access • Reduced piracy of your software • Lower Cost • Continuous Technology Enhancements

  18. Questions?

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