Source: http://www.b-eye-network.com
As companies move toward the use of
software as a service, they must carefully evaluate the impact of this on the
overall enterprise business intelligence system.
Software as a service, or SaaS, is a confusing term that means different things
to different people. To the consumer, it may mean the ability to buy and
download desktop software using the Internet, or to pay an annual fee to
vendors like McAfee or Symantec for keeping desktop virus definitions up to
date via the Internet. At the other extreme, for a business organization, it
may mean purchasing Internet-based application services from a third-party
vendor.
Broadly speaking, SaaS can be broken down into three main
types of service:
On-demand software purchasing where individual users or
organizations try, buy and download personal, workgroup, or enterprise software
across the Internet. For vendors, software-on-demand provides a cost-effective
sales channel and software delivery mechanism. For users, it provides a fast
and easy way to obtain software.
On-demand IT service-oriented architecture (SOA) where IT system and application
processing is defined and developed as a set of services that can interoperate
and exchange information with each other. A SOA offers a flexible approach to
application development that encourages service re-use and reduces the need to
build point-to-point connections for data and application integration.
On-demand application services where individual users or
organizations pay external third-party providers for the use of their
application services. The objective of this type of SaaS is to trim software
and hardware costs, and to reduce IT staffing and skill requirements. This
approach may also be used as an interim step before bringing application
software in house.
Some industry analysts describe the on-demand application
services model as SaaS 2.0, because it extends the capabilities of earlier SaaS
initiatives. An on-demand application services vendor may, for example, support
a SOA for providing easier access to the services it offers.
Two key characteristics of SaaS 2.0 are:
- Network and Web-based access to commercial software
computing services where the processing is done on a third-party server,
rather than at each customers location.
- A tenant-based pricing model for hardware,
software, administration and consulting services.
Services for printing photographs, providing search
capabilities or checking e-mail for spam and viruses are examples of SaaS 2.0
for the consumer. These services may be paid for directly by the consumer, or
indirectly through advertising revenue (as is the case with Google, for
example).
For commercial organizations, SaaS 2.0 could involve the
offloading of front-office and back-office business processing to a
third-party. Salesforce.com is a good example of a very successful SaaS
provider in this category.
A survey (SaaS 2.0: Software-as-a-Service as Next-Gen
Business Platform, Saugatuck Technology research report SSR-239, April 2006) from Saugatuck Technology
indicates that 12 percent of U.S. companies have at least one major SaaS 2.0
application in use, with an additional 13 percent currently designing, prototyping or implementing their first SaaS application. Another 14 percent are planning to do
so later in 2006 or in 2007. Saugatuck expects continued strong provider growth over the next 18 months, especially among application providers such as
Employease, NetSuite, PerfectCommerce, Right Now Technologies and
Salesforce.com. The Saugatuck survey also indicates that small and medium-sized
businesses (SMBs) are a key driving force in SaaS adoption. SMBs are embracing
SaaS at twice the rate of large enterprises. (A summary of this research can be
found on http://www.sandhill.com/opinion/editorial.php?id)
The
Business Case for Saas
At first
sight, SaaS 2.0 appears to be another version of the application service
provider (ASP) model that failed miserably after the dot-com bust. There are,
however, some important differences between the two models. The first is that
the ASP model focused primarily on giving an organization the ability to move
certain application processing workloads to a third-party managed server.
Unlike SaaS, ASPs were not necessarily concerned about providing shared
services to multiple tenants. Also, most ASPs did not have a significant amount
of application and business domain knowledge about the applications they were
running. SaaS providers, on the other hand, usually have a large amount of
domain expertise.
