PERSPECTIVE: Why SaaS?

3000 new companies a day are signing up world wide. More than 10 million active users in more than 500,000 companies are currently using it. For only $50/individual/annum, it gives you the ability to handle e-mail, Web hosting, calendars, instant messaging, and standard business applications like word processing, spreadsheets and presentations. It is Google apps.

Don’t get me wrong! I am not marketing Google apps – and I am not paid to do this! – I am just referring to it as a successful implementation of “Software as a Service” or SaaS

SaaS is the newest business model – some prefers to call it deployment model – in software industry. As the name implies, SaaS is about providing software as a service! The provider is responsible of hosting, maintaining, and owning the application while clients leverage the service without any over heads.

SaaS proved to be a successful business model. A lot of software companies, including Microsoft are striving to provide their applications as services; As SaaS is a win-win solution for both service provider and service consumer. SaaS gives the service provider the freedom to:

1. Transparently modify the infrastructure without  acknowledging clients to adjust.
2. Transparently maintain the code, adding features and upgrading the application features and  components.
3. No more compatibility issues between different applications and components versions. It is all managed by the service provider
4. Ability to continuously upgrade the application, clients do not have to wait for the next version to see the features they asked for and they’ll be seeing the application develop on weekly, if not daily basis
5. Less  maintenance time, no need to send batches to each client. No hassle in coordinating batches installation with client system administrators
6. Less embarrassment! If  a client found an issue, the service provider can fix it once and for all, with out the need to send batches to all clients and justify the need for the fix – unless there are consequences they should be aware of.
7. Less installation time, clients can register on-line and you’ll directly get money
8. No fear of piracy and unregistered versions of your application! The code is under the custody of the provider.
9. Ability to  vertically and horizontally build on the application. Providers can add more features to existing components or even add complete components. It is easier to convince existing client to buy more services. e.g. You’re a travel agent management system provider. You can add an accounting component that is seamlessly integrated with other components.
10. Establishing a community of common interests, This  helps providers to  build further on that. I.e. for a travel agent management system, the provider creates a portal for traveling, and enable registered agents to host content, advertisements, and promotions on it. Having a good content will get  traffic to the portal, and traffic is usually translated into money.

Now for the client:

1. No need to worry about maintenance, defects might be solved on the spot.
2. No need to worry about installation , operating system and/or hardware upgrades
3. Less cost. SaaS services, usually come at lower cost. Google apps  cost $50/individual/annum, which is nothing compared to the value it adds to companies. Also clients won’t  need  an in-house system administrator
4. No need to worry about scalability of the system. The provider will take care of this.
5. It’s a matter of some clicks – and maybe credit card no. 🙂 – to add new services, features or components.

It is worth mentioning that, Google was not the originator SaaS, many companies have realized the  opportunity in SaaS and took advantage of it, before Google.
Finally, if you’re considering starting your own start up. or if you’re client considering your alternatives,  I advise you to go with SaaS , and if you’re still not sure about it, ask Google!.