What is SaaS?

Software as a service (SaaS) is a model for using software as a subscription service instead of
buying the license and installing the application files on a local computer from a CD, or
increasingly as a download from a vendor website. According to technology analyst firm IDC,
key characteristics of Software as a Service include:

 Network-based access to, and management of, commercial software.

 Server management from a central location rather than at each customer site.

Software as a Service is generally priced on a per-user basis for each application, with billing
managed by a major credit card. Sometimes there are minimum user requirements, minimum
subscription time periods, as well as additional fees for setup, extra bandwidth and storage.

Saas Working Model

Who is it for?
In the business-to-business arena, the Software as a Service model is most often focused on the
small-medium business segment. Unlike large enterprises, smaller companies have:

 Little or no staff devoted to information technology, and the employees they do have are
often stretched thin and are generalists in their knowledge and skills.
 Limited budgets, particularly for capital expenditures.
 More fluid needs for tools and people due to rapid growth and other changing
requirements.
  Greater demands on time, as most small business owners and their employees wear
multiple hats.
 Growing propensity to operate on a ‘virtual’ model, with employees working from home,
at remote work sites, or from rented office space that is shared with other businesses.

The flexibility of software as a service is particularly attractive to small business owners –

 No upfront investment in money or time, and often no contracts.

 Ability to use powerful business applications without having to acquire the specialized
infrastructure and staff needed to manage them.
 Power to mix and match applications or add and remove users as needed
 Freedom to work from any location.

How does it work?

The Software as a Service model requires primarily a web browser and an internet connection:

1. The customer goes to a website and ‘buys’ a subscription – generally monthly – to the
desired Software as a Service applications and number of users. An account is set up
with a major credit card for billing.
2. The person who places the order (who generally becomes an administrator) is given login
credentials and a web URL for secure access to the Software as a Service application.
3. Every user added to the account receives his/her own log-in credentials granting them
web access to the Software as a Service application(s) for as long as needed and as long
as specified terms are met.

Most Software as a Service vendors provide a secure web portal with additional services such as
support, along with administrator access for changing the number of users or applications and
maintaining other account information.

Advantages:
Since nothing resides on a single hard drive (with a few exceptions in which files must be
installed locally), the application can be used from any internet connected PC, providing greater
flexibility.

 With pay-as-you-go terms, you pay only for what you use.
 You’re never locked into a license, so there’s no obsolescence and no buyer’s remorse if
something doesn’t work out the way you thought it would, or if requirements change.
While purchased software cannot be returned, software as a service subscriptions may be
cancelled.
 Reap the productivity rewards from an application whenever you want, without a
commitment or big upfront investment in money or an evaluation process.
 Add or remove users as staffing needs change, and applications as business needs change.
 Predict and budget how much you will spend, and move the cost from a capital
expenditure to a business expense.
 Redirect financial resources, people and time for other needs and priorities.
Disadvantages:

 With SaaS, the users do not have a copy of the executable file: it is on the server, where
the users can’t see or touch it. Thus it is impossible for them to ascertain what it really
does, and impossible to change it. SaaS inherently gives the server operator the power to
change the software in use, or the users’ data being operated on.
 Users must send their data to the server in order to use them. This has the same effect as
spyware: the server operator gets the data. She/he gets it with no special effort, by the
nature of SaaS. This gives the server operator unjust power over the user.

Final word on SaaS:

 Software as a Service vendors manage software as a core business with experienced,

dedicated staff in professional data center facilities.
 Security, redundancy and resources are equal or superior to those of the largest, most
sophisticated enterprises. With today’s security threats and the growing importance of
information technology for productivity and competitive advantage, robust facilities are
moving from ‘nice to have’ to ‘must have’.
 Bandwidth has become readily available (particularly with the growth of wireless) and
highly competitive, making it more dependable as well as less expensive. Today, homes
and offices are routinely equipped with high-speed, broadband internet access.
 You will have one less thing to worry about. No servers, systems or software to install,
administer, backup, protect and upgrade.