On Demand Blogging by Stephen Pech

Does SaaS have to be Web only? Phil Wainewright picked up on this point in his blog SaaS client reaches functional parity with client-server where he talks about RightNow’s use of a .Net based managed client.  So where do Java, AIR/FLEX, Silverlight and .Net sit in the SaaS model?

I agree with Phil in that SaaS is more than just web technologies.  The main push of SaaS is “as a service” - so applications that provide a maintained and managed client side interface are definitely SaaS.

AIR/FLEX, Silverlight, Java and other client side technologies are already part, or are becoming part of the accepted web eco-system just like JavaScript and server side page scripting was added to HTML in the early days.

My definition of SaaS is a service that provides a better service to the customer through

• Web or network-based access
• a Multi-tenant architecture to permit multiple clients to access the same system
• Payment flexibility and advantages over the traditional software model
• External and centrally controlled hosting and management by the service provider

Ideally standard, cross-platform technologies like the web are the preferred method of delivery.  By using .Net, RightNow’s customers are restricted to using their service on only the Windows platform, however that is 80%+ of all devices and if it means a better customer experience and a happier customer then this is definitely a version of the SaaS model.

It is a SaaS variation but is it a good model in the long term?  The future of application access is mobile devices like the mobile phone, Blackberry, Palm, iPhone, Andriod, and Windows Mobile.  Note that Windows is only one of these access points and definitely a minority.  By tying their SaaS offering to windows technology like .Net, RightNow are investing in a platform that provides a good customer experience today, but that is likley to provide a limited one tomorrow.

SaaS in the office is the next big hurdle for the Software as a Service model.  Progress is being made, however to convert users of the application we use the most everyday, the offline and collaboration questions need to be solved well.

I am using buzzword at this moment to write this article and I am able to do everything I need to do simply and easily. It does not have all the features you may possibly need but 99% of my requirements are a couple of clicks away, many less clicks away than in MS Word. Just as important as that is that I WANT to use it, it’s attractive, inviting and COOL.

buzzword (http://www.buzzword.com/) is built on Adobe’s offline platform and uses  AIR and FLEX, and built so well that Adobe recently purchased the company that built it.  It manages both online and offline access pretty well by allowing full use of application when offline, auto-saving constantly when online, and instantaneously picking up when it is no longer connected. It didn’t  however allow me to ‘save’ my document while I was offline ready for a synchronization when I next connected.

buzzword demonstrates many of the facets that I believe the next wave of applications should as well as some of the power of the offline web concept touted by organisations like Firefox, Adobe, and Google recently.  The offline web needs to be bulletproof for SaaS to hit it’s (enormous) potential - offerings like buzzword are encouraging me to think that the offline web will be here to help that sooner rather than later.

There are many other shining example of quality SaaS offerings in this area, Zoho, Thinkfree, and Google Apps are some that I have personally used, but the one example that has impressed me the most has to be buzzword.

There has been a lot of progress made towards SaaS taking over in the office productivity area.  The next importantly steps are full offline functionality and unlocking the collaboration potential that a SaaS model provides.  None of the products I have used do this effectively enough to make the Software as a Service model impossible to pass up, however we’re quickly getting close, and quickly.

* I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.

Human history and development shows that human advancement has been fundamentally linked to specialization.  It is the concept that a service can be performed more effectively and efficiently by an organization or process setup to perform that specific task.
SaaS is the current wave in the perpetual tide of progress of specialization.  The buzz behind SaaS, effectively business process and systems maintenace & management outsourcing, is the result of a “perfect storm” of many forces, one of the most notable being the drive for efficiencies from specialisation. 

What is it about?  Why?

Read this article for an Introduction to SaaS

It’s not about lower TCO, but SaaS is likely to provide that

It’s not about low to no Capex, but SaaS almost definitely means that.

It’s not about 24/7 access from anywhere, though you’ll probably get it.

It’s not even about better data security & backup, better reliability, and more uptime, though they are benefits you’re likely to enjoy.

SaaS is about the perfect storm of better technology, maturing customer demands, maturing of business process best practices, and the relentless drive for efficiency via specialization producing a solution that improves on the superseded traditional model  in not all, but in many ways,  and in many scenarios.  Treb Ryan has a interesting take on the movements these factors have taken in his blog entry Cloud Hogwash.  You can loosely combine the first two points under “cloud applications”, and the fourth under “cloud computing”.  The factors are:

1. Technology can do it – web, UI, and internet technology has developed to a point where it is now viable to deliver a solution from a remote location anywhere businesses need it.
2. Businesses demand it  - they now see the benefit of, and want to outsource where it is not their core competence.  This has been encouraged by success in other out sourcing areas.
3. Commoditisation allows it – The explosion in all forms of communication, books, TV, newspapers and of course the internet, have allowed people to share information like never before.  Some of this information covers business processes and best practices and it is this sharing of information that has led to the commoditisation of business processes beyond even what has been available in the Client Server era.
4. Efficiency requires it - I expand on this below

Specialisation and Outsourcing

Mining sites, military bases and hospitals can have their own electricity and/or  water supplies, and they should because they have large, specific  requirements, but I personally use the common electricity grid and water supply very successfully.  Over time products and services become commoditised, you don’t make your shoes nor bake your own bread, but you still have shoes and bread, and they required fewer resources and lower opportunity cost, because they were manufactured by a process tuned for that specific purpose.   

SaaS & Specialisation

Just as transport has moved from horses, to trains, to cars, to planes - so business process solutions have moved from mainframes, to internal hosting, to out sourcing (including ASP/MSP), to SaaS.

The IT platform of the last 20 years has been very effective at helping us realize the potential of technology because of its versatility and flexibility.   This Jack of all trades platform is and always will be needed, but some, and increasingly more of the processes we trusted to that platform are not suited to it anymore.  Organisations directed at a specific process can perform with fewer resources and a lower opportunity cost

Just as in the mainframe days, the requirements of the customer are too much for their internal IT departments to handle.  With mainframes the attraction was processing power, now it is amongst other things, mobility, reliability and manageability that make SaaS so attractive.

Where to next?

SaaS is taking the processes that it enables closer and closer towards a commodity utility.  This is making the value proposition of SaaS too compelling for businesses to ignore.  As Geoffrey Moore states in his book ‘Living on the Fault Line’, it’s only in areas that are mission critical and/or where a clear competitive advantage is derived that organisations should be looking at in sourcing functions and processes.  SaaS adds enormously to the reliable ecosystem of offerings needed for that vision.

References

• Nicholas Carr, ‘The Big Switch’
• Geoffrey Moore, ‘Living on the Fault Line’
• http://www.itbusinessedge.com/blogs/sts/?p=285
• http://www.vnunet.com/itweek/news/2206496/carr-picks-saas-global
• http://www.opsource.net/blog/2008/02/04/cloud-hogwash

* I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.

Despite the enormous buzz around SaaS I am still regularly asked for an overview of what it is, what it means to the user, and how it is different from the ASP model.  Because Software as a Service is a community idea, with many different takes on ideology and implementation it is not always easy to define, but one point I always try to relate is that is that SaaS is the next step in the continuing maturity of both information technology and business services, not a deviation away from it.  In this article I a trying to give a quick entree into SaaS for the business men and women as yet unaffected by it.

What it is

Software-as-a-Service (SaaS) is a software application delivery model where a software vendor develops a remote access capable software application and hosts and operates the application for use by its customers, who pay not for a license, but for use or benefit derived (taken from the NexGen website).  Also see Wikipedia SaaS entry .  For a technical definition I find this list of characteristics very useful:

• Remote web or network-based access
• Multi-tenant architecture to permit multiple clients to access the same system
• Payment flexibility and advantages over the traditional software model
• External and centrally controlled hosting and management by the service provider

What it means to the user

It means no local installation, operation outside the firewall, no maintenance, no upgrade costs, no CapEx, less technical resource issues, a single point of responsibility for each process area, and quick relevant product iterations.

The buzz

SaaS is not just the future anymore, it’s now.  Gartner predicts that Software as a Service will be 25% of total new software revenue in 2011, it has crossed the chasm of acceptance and is now mainstream, and 80% of US CIO’s have it on their implementation list for 2008.  Dell and Microsoft are buying SaaS companies all over the place.

SaaS and ASP

The Software as a Service model is the mature realistic version of the old ASP model with the addition of web and platform technology which caught up allowing the interface to be usable and quick, and the platform to be multi-tenanted (multiple customers on the same system) which means more efficient cheaper operation.  SaaS also has generally moved the system hosting and management responsibility over to the software developer, and away from the local provider who generally managed it in the ASP model.  It will always be that a product consumer will want to do as little as possible more than their core competency, and Software as a Service is one step closer to that.

The customers perception of the difference between ASP and SaaS is simple

• The technology has improved
• People’s perceptions of Web security has improved
• Web access is nearly ubiquitous
• Multi-tenancy technology means more efficient and lower costs (this is important as many users can use the one system just with data and access privileges divided).

The industry

Originally chartered by companies extending the business outsourcing model such as ADP,  SaaS has spread into all sectors of business process, including verticals (a department such as HR), horizontals (a single solution for all users such as email) and niche areas (email especially for HR).  Now that SaaS has proven itself and “crossed the chasm” (at least in U.S. it has – here in Asia Pacific we’re beginning our run up to make the jump), the Platform wars are beginning - the Web has been chosen as the user interface but the back end for the applications to run on is still an open race.

SaaS in Asia and the Pacific

Though currently behind in terms of Software as a Service adoption, our Asia Pacific region is likely to be a future SaaS driver.  Developing economies mean new companies with no legacy systems and a desire to catch up quickly with the best technology.  They also mean new public infrastructure such as internet access via technologies like WiMAX producing a leap frog effect.  Also the explosive growth in the region and some local accounting practices that encourage software to be treated as OpEx rather than CapEx add to the expectations in the region.

Summary 

Software as a Service has an enormous amount of buzz because of the benefits to user organisations such as cost efficiency, increased mobility, payment flexibility, and superior externally managed systems.  For an in depth look at the forces behind Forces behind SaaS see the article on SaaS as a maturation of business processes.

 * I also post versions of relevant AsiaPacific articles from this this blog on the SaaS Asia Pacific Community site.