edocument sciences saas 101

What is Software as a Service?Introduction, Trends and Perspectives in Software as a Service

William M. Blake

President, eDocument Sciences, LLC

Phone: (716) 913-6676

e-mail: [email protected]

www.edocumentsciences.com

mailto:[email protected]

http://www.edocumentsciences.com/

SaaS = Software as a Service

• Deployment/Delivery model

– Hosted and Managed by vendor

– Delivered across the Internet

• Business model

– Usage-based pricing vs. perpetual license model• Per user per month

• Per transaction

• Per GB of storage per month

What is SaaS?

Definition of SaaS

• Software offered as a service to multiple customers with the following main characteristics:

• Standardization of software – eventually customized for specific customers and markets

• License based on usage – pay-as-you-go

• Service includes maintenance, support and upgrades

• Data storage at SaaS vendor

• Web-based through Internet browser

Customers want a choice

Changing economic & ecological conditions

Changing competitive forces

Changing workplace requirements

Changing technologies

Changing priorities & sourcing policies

Primary Drivers of SaaS

• Lower entry point– No large up-front investment in

• Software licenses

• IT infrastructure

• Lower operating/maintenance costs– Fast, easy deployment (Web browser)

– Vendor maintains/upgrades application

– No IT staff necessary to keep running

• Consumption-based expenditure– Pay As You Go (OpEx vs CapEx)

– Scale up/down as needed

Benefits of SaaS - Customers

• Economies of Scale

– Derived from Multi-tenant architecture• Better resource utilization

• Simplified maintenance

– Operating costs per customer drop as customer base grows

• Better understanding of usage patterns

– Drive innovation and enhancements

• Faster release cycles keeps up with market/competition

• De-facto access to Global market

Benefits of SaaS - Vendors

• Network-based access to commercially available software

• Multi-tenancy (one-to-many)

• Payment Model

• Central Application Management

– Software

– Infrastructure

• Control of Upgrade Process

What makes an application SaaS?

• ASP: Application Service Provider

– Single-tenant architecture (one customer per instance)

– Multiple instances running (as many as there are clients), typically hosted by third parties

• Disadvantages

– Significant management overhead

– Difficult maintenance

– No economies of scale

SaaS vs. ASP

SaaS is different from on-premise software in more ways than one.

SaaS Model

• Client/User Registration & Management

• Provisioning

• Billing & Payment Processing

• Performance Monitoring

• Usage Metering & Tracking

• Reporting

• Customer Service & Self-Service

Business Functionality of SaaS

SaaS Business Model Implications

• New sales & marketing approach

– Greater emphasis on web-centric cycle

• New sales & marketing compensation

• New release cycles and maintenance model

• New deployment/delivery approach

• New/higher expectations on customer service

• Uptime and SLA

• Professional Services

• Deployment Challenges

– 31.1% of SW projects cancelled before completed

– 52.7% of projects cost nearly 190% of original estimates

• Operational Costs

– Maintenance & management costs >10x original license fee

– Escalating hardware & staff support costs

– Over provisioning and under-utilization of SW licenses

• Economic/Budgetary Pressures

– Need to reduce IT costs and increase business benefits

– Need to increase utilization to gain greater ROI

Shortcomings of Legacy on-premise Apps

Old

• Capital Investment

• Complex, Customize

• Reactive Maintenance

• Response Time

• Customer Support

• Limited Responsibility

• Outsourcing Alternatives

New

Operating Expense

Simple, Utilization

Proactive Management

Ongoing Monitoring

Automated Delivery

Higher Accountability

Out-Tasking Options

Enterprises Seeking to Generate Greater ROI at Lower TCO.

Changing Customer Expectations

Economy Uncertainty

TighterBudgets

Greater SaaS Opportunities

+ =

Equation for Greater Opportunities

Gartner’s Hype Cycle

You are here.

Gartner’s Slope of Enlightenment

• Most enterprises will seek mix of on-premise and on-demand solutions

• Users prefer choice

• Users seeking on-demand/on-premise integration

• ‘Applets’, Appliances, etc. will permit off-line use and synchronization

Living in a Hybrid World