Posted by: lrrp | February 16, 2009

What is Software as a Service (“SaaS”)?

SaaS, has to be one of the weirdest terms in IT that makes it impossible to forget. Software as a Service (SaaS) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over the Internet. It brings the best of both worlds in which, software makes services better and services make software better.

The best example we can think of to better understand SaaS are the “free” email systems offered on the Internet such as G-mail, Yahoo Mail and Hotmail. Each program meets the basic criteria of an SaaS application: a vendor (Microsoft, Google or Yahoo) hosts all of the programs, logic and data in a central location and provides end users access to this data and the software which is run and used over the world-wide web.

This “simple” application architecture can then be applied to a wide range of software applications for use by either business enterprises or individual end-users. Best example are the Google Apps for Business, which provides email and collaboration solutions for enterprise users.

Traditionally, the user purchases a software package and license by paying a one-time fee. The software thereby becomes the property of the user who made the purchase. Software support and updates are provided by the vendor or developer under the terms of the license agreement.

SaaS, on the other hand, does not have licenses. Rather than a single fee, payment for the use of software is through subscription. The user’s access and use of the software ends when he stops paying subscription fees. Moreover, the software is not downloaded to the user’s computer. In the example we used, G-Mail or Hotmail is not “resident” on your computer – you access and use it through the Internet but it is not loaded and stored onto your computer.

SaaS is becoming an increasingly prevalent delivery model as underlying technologies that support Web services and service-oriented architecture (SOA) mature and new developmental approaches, such as Ajax, become popular. Meanwhile, broadband service has become increasingly available to support user access from more areas around the world.

Some of the key benefits of using SaaS include; easier administration, automatic updates and patch management, compatibility, collaboration and obviously global accessibility.

Although SaaS has been quite prominent since the early 2000s, the current economic situation can downplay its adoption. As companies are cutting back on staff and users of applications, the number of subscriptions will reduce. On the other hand, having the option of “renting” the software instead of “purchasing” provides an opportunity for SaaS vendors to grow.

Some of the well known SaaS vendors

Salesforce.com – When most people think of SaaS, they think of Salesforce.com, the Customer Relationship Management (CRM) juggernaut founded in 1999 by former Oracle executive Marc Benioff. Nearly all research firms cite CRM as one of the largest current applications of SaaS behind content, communications and collaboration.

Successfactor – Most people outside the world of Human Resources have never heard of SuccessFactors. Soon enough, they will. Founded in 2001, the firm uses SaaS to deliver its talent management services, making steady growth in the markets.

Adobe Systems – For most of us, this could come as a surprise to consider Adobe as a SaaS vendor. Being a powerhouse, they have made major strides into the SaaS world offering services such as Acrobat Connect (A desktop sharing platform), Adobe Remix (Hosted video editing service) and Stock Photos (Provides browsing and purchasing of stock photos provided by Adobe).


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