SaaS – Bridging the Gap to Micro Business Services

Dennis Adonis

Software is now widely recognised as one of the leading drivers of industrial disruption.

We've previously discussed the impacts this having on businesses, government agencies and entire supply chains. We also touched on some of the pathways being explored to quickly implement new competitive capabilities, including digital partnerships, and investing in development (Microservices).

Let's take a closer look now at the reasons for the growth of Software as a Service (SaaS) and the benefits possible from giving knowledge workers direct access to the capabilities to solve their immediate business challenges.

The benefits of the Software as a Service model

SaaS vendors specialize in developing and maintaining discrete, best-in-breed software, such as accounting, marketing or communications suites, which can easily be inserted into existing operations, and have a range of benefits over internally developed applications, including:

1. Subscription Pricing Model - from CAPEX to OPEX:

SaaS applications are typically sold on a subscription basis that includes upgrades, maintenance, and varying degrees of customer support. SaaS subscription models are usually monthly operational charges, which require no initial capital investment and are immediately tax deductible, removing up-front cost based barriers to adoption.Ongoing use of the service is dependent on continued satisfaction, which incentivises vendors to keep innovating and providing a best-in-breed solution.

2. Rapid Deployment:

SaaS applications require no additional hardware and little or no IT support is required for implementation, allowing for rapid installation, demonstrations, prototyping, and access.With many SaaS companies offering free trials, this means a painless proof of concept and discovery phase to prove the benefit to the organization.

3. Vendor Responsibility for Upgrades, Uptime and Security:

SaaS vendors take on the responsibility for maintenance and development of the software, ensuring it is reliable and meeting agreed-upon service level agreements, and keeping the application and its data secure. SaaS upgrades are seamless and frequent, and normally included in the ongoing subscription charge. These incremental updates need less testing and have lower end user acceptance and training costs.Concerns over security have largely been alleviated, with most vendors providing a greater level of security than the enterprise itself would provide, with redundant instances in highly secure data centres, in multiple geographic locations. Backups and recovery are also managed by vendors as part of their core competencies, and up-time levels are guaranteed as an integral service level agreement.

4. Higher adoption rates:

Delivery via familiar web browsers means SaaS apps tend to have lower learning curves and higher adoption rates. This is especially significant given the high cost of on-premises software development and implementation, vs. the low cost of entry for SaaS.

5. Work anywhere:

Since the software is hosted in the cloud and accessible over the internet, users can access it via mobile devices wherever they are connected, facilitating remote or home-based work, and work across multiple sites.

6. Integration and scalability:

Most SaaS apps are designed to support some amount of customization as to business requirements. SaaS vendors create APIs to allow connections to internal applications like ERPs or CRMs, and also to other SaaS providers.As usage requirements grow, no further investment is needed in server capacity and software licenses, just adjustments to the level of subscription.

These have led to SaaS applications becoming the dominant software delivery model, in line with the growth of the entire cloud spectrum. Instead of needing large, costly, and risky projects, new capabilities can immediately be delivered as micro business services.

Goldman Sachs forecast that global spending on cloud computing software, infrastructure and platforms will grow at a 30 percent CAGR from 2013 through 2018 compared with 5 percent growth for overall enterprise IT.

Check back in next week as we look at SaaS delivered enterprise communications, and the range of use cases that can be applied to solving tricky, edge-case operational challenges.