Software as a Service at Glance

by Dmitry Kirsanov 29. January 2012 15:00

Software as a paid ServiceI am beginning the series of articles about various SaaS solutions offered by various companies – some known and some that you probably haven’t heard about, and since all of them share that characteristic of being the SaaS solution, it is important to describe first what SaaS is.

In the upcoming series I am going to describe multiple SaaS services and focus on the alternative ways to have the same functionality. My goal is to describe each of them so you could understand them without digging into the documentation or waste time trying.

SaaS, or “Software as a Service” is a very popular buzzword these days. It is usually connected to the cloud – yet another pestered buzzword, but it’s not necessarily the case, as the SaaS has a history older than the cloud itself.

The 3 types of Software Development trends

In software development, there are three main types of trends, which differs by the direction of initiation. Trends, initiated by software developers, trends initiated by customers and trends initiated by sales people.

Trends, initiated by customers usually focus on ease of use and “no hassle” behavior – take a look at OSX, the operating system of Apple computers, and you’ll see it. An example of customer-initiated trend is the ability to log-in to some website using the logon credentials of other website. For example, you can leave a comment to this article by using your Twitter account. So, while it usually adds to the sales to remove the extra registration requirements, the main focus of this particular feature is to make it easier for end users to do what they want.

Trends, initiated by software developers are usually associated with innovation. Sometimes they are pain in the neck for end users and sales – first group have to adopt something, while others need to create a sales pitch for something they have to understand first. An example of developers-initiated trend is HTML5.

And, finally, the trends initiated by sales is what can be described by the principle “something for nothing” – features that have a single reason to exist – to squeeze more money from customers. Don’t get me wrong, I am not against paid software or services, I’m just describing things as they are.

Providing licenses by subscription, and most of paid online services, which could work as standalone applications but don’t – it was done with a sole target of getting more money without contributing more value. Well, that’s the goal of any business – get as much return of your investment (ROI) as possible. If you get 200% in return of your investment – that’s good, but what is so adorable in computer software business – you can get an infinite ROI.

The Cloud

Basically, the Cloud means that you join all of your hardware together and it acts similarly to Beowulf Cluster, meaning that you could use all resources of joined computers as a single infrastructure. For example, if you would have 2 servers, with 5 imaginary capacity units per each, you could create a virtual server consuming 7 capacity units, which would take resources from these two.

Another allegory is your house. Imagine, that you could take all the living space of your house and create a single hall from it. No matter how many floors you have, or even how many houses – they all form one huge hall which you could use to store things which wouldn’t fit into one single room. You could create virtual rooms using temporary walls and use the free space as you will.

The Cloud, as the technology, was a developers-initiated technology, because even though it eases the life of systems-administrators, it was much harder for software developers to create load-balanced failover solutions and maintain it. The Cloud has to solve it, and so it did.

You’ve heard the term “the Private Cloud”, or maybe you even own one, which basically means that you have the same cloud as you could get from any cloud solution provider – be it Microsoft or Amazon, but without the subscription. You join your servers to act as one platform, on which you could establish solutions, which would consume resources exceeding the capacity of one machine.

In Windows world, the private cloud is available through use of System Center Virtual Machine Manager 2012.

Reasons for SaaS

Sales

When software was mainly standalone, meaning it didn’t require any backend to function, it was a bit complicated to charge customers endlessly for use of your software. In software world, the possible perks are limited. You could provide support, but if your software is well done – who would need your support? You could provide a time limited license or subscription for a lesser price than “full” license, but again – chances are users would migrate after year or two.

So the idea was to hook end users so they would become dependent from the server infrastructure. For that, some vital parts of the software should work on the server of the software vendor, and only be provided to users who paid. I bet you’ve seen it many times – many programs like SEO-analytics software are performing their work on server while they could do it on your own machine.

But that wasn’t enough. The trend was set to create online versions of everything that could work online. And so now we have different kinds of applications working 100% on server – office suites, CRM, database servers – you name it. And you pay for access, but you don’t own the infrastructure. So you’re hooked.

Technical side

It was always like that – to install and maintain, and even to use something, you had to hire Mr. Smart Guy, who is usually the opposite to Mr. Cheap Guy. Usually it’s not the case with online software, because the hardest part – setting up and maintaining the infrastructure – is not your headache anymore.

For some solutions that went online – like Microsoft Office suite, setting up the local offline counterpart isn’t hard. Well, that was very simple task. Even maintaining it company-wide is a simple task. But take something more advanced, like CRM system, and soon you find out that you need a specialist in order to set it up. Or at least do it properly.

So, for those far from technical side, having access to online version was a salvation. Take into account the upcoming shortage of qualified IT specialists, especially software developers, and cloud looks even brighter. But what’s hiding in that cloud?

The good news – consuming hosted applications means that you can fire half of your IT personnel. And decommission half of your servers. And forget about paying for server software, electricity and whatever else.

Bad news – all your bases belong to them. Your data is hosted somewhere. It could be lost. It could be used or stolen. You could trust, but trust is a state of mind, hardware failure is not.

Technically, it is easier to support solution when it is hosted on your premises. So, if you own a cloud-based solution and sell access to it to your customers, you don’t have to support many different environments and have many specialists installing and debugging your solution all over the world. And the most beautiful part – your customers are hooked, they depend on you so much, that you can fire half of your sales guys as well.

End Users

It could be hard to split the genuine End Users` opinions from the result of sales pitch of SaaS providers. There are just a few reasons end users consider as benefits of SaaS:

  • Total Cost of Ownership (TCO) is too high for standalone systems.
    For example, to host Microsoft Dynamics CRM 2011 you would need a very good server, consultant, server operating system and perhaps some additional infrastructure if you want to reach your server from the outside. That’s thousands of dollars. And if you don’t have funds for such investment, the online solution could look more feasible.
  • Lack of qualified IT personnel
    Sometimes it’s hard to find the qualified system administrator for the solution you want to install. There are kinds of servers where MCSE is just not enough. And what could you offer to a better specialist and isn’t his salary higher than operating costs of the online version of the software?
  • Energy
    The energy will be consumed anyway, but in case of data center chances are it won’t be consumed by idle servers. Some “eco-freaks” consider this factor to be of extreme value, that’s why you can find it in every cloud-oriented sell sheet.
  • Pay-as-you-go
    Sometimes the solution is about to be used rarely and the scale of use is microscopic, while the standalone infrastructure would take thousands of dollars and just doesn’t worth the hassle. In that case cloud solutions usually have pricing models which allows you to pay for the actual use. For example, in Microsoft Azure you pay per CPU cycles and bandwidth consumed.
  • Hopes of high uptime
    We always consider 3rd party hosting as the one superior to ours and gladly transfer the responsibility to someone else’s shoulders. The truth is – all services go down sometimes, but it’s always calmer to have someone else taking care for your website’s uptime.
  • Hopes of better security
    At least you know, that if the service will be hacked, you will be one of many victims. It’s always better than to be the only one.
  • No need to update / upgrade software
    Indeed, if you rent the online version of the software, like the mentioned CRM, you can rest assured it will be the latest at any time. Sometimes upgrading is a risky business and costly as well.

So, as you can see, there are many reasons to have the software serviced instead of licensed, as well as there are some disadvantages. It always depends from the scenario - whether the SaaS is more preferable solution or not.

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