In the March issue of Customer Interaction Solutions magazine, we surveyed several firms on issues and best practices with hosted/Software as a Service (SaaS (News - Alert)) solutions. The questions were:

 

1. What are the key benefits of buying a SaaS-based solution as opposed to those delivered through software licenses on premises equipment or thin-client applications?

2. Which software applications work best for SaaS and which ones are best provided through other methods and why?

3. Has there been growth in SaaS-suitable solutions and if so in which areas and what has been the drivers?

4. Do you see more suppliers opting in for SaaS delivery? Are any of them choosing to dispense with premises or thin-client altogether? Do you see all solutions eventually being delivered by SaaS and if so in what timeframe?

5. What challenges are there in deploying SaaS and how can they be best overcome? Have these challenges lessened or increased and why?

6. SaaS has been compared with leasing versus buying a car. Is there a point and if so what is it that it becomes less expensive to buy licenses that to contract for SaaS?

 

We published the answers from Enkata, Genesys Telecommunications Laboratories, and Interactive Intelligence. Here are the replies from two firms who participated, Sitel and Verizon Business:

 

From a financial perspective, SaaS solutions are usually priced as an operating expense versus a capital expense which is attractive to many companies working to reduce capital expenditures or even pilot new offerings to validate business cases. 

 

For many companies, a SaaS solution can alleviate the need for a specific technical expertise outside of their in-house skills; perhaps opening the benefits of an Open Source Linux solution to a mainframe or Windows development shop. Lastly, a SaaS solution can also provide solution access to remote users for a company without a vast network infrastructure.   

 

I believe any application that is not part of your company’s competitive advantage is good candidate for SaaS. Your competitive applications will most likely need continual enhancement to meet the changing aspects of your business or of your clients, so you would need resources and capabilities to provide these enhancements.

 

The fact that many SaaS solutions have become ‘best-in-class’ surpassing the capabilities of an in-house or competitive purchased solution has contributed to growth in this space. Also the increase in virtual employees and broadband access has helped to foster environments favorable to a SaaS solution.

 

The SaaS delivery model is too attractive for many functions and organizational needs making it a near certainty of significant growth with SaaS solutions in the years to come. As key IT solutions create competitive advantage in the marketplace, I believe there will always be solutions developed specifically for use within a company; therefore, not necessarily suited to a SaaS model.

 

The greatest challenges revolve around data security and the SaaS provider’s ability to unequivocally meet all client requirements, government regulation and/or industry standards. The service provider’s solution must be of the highest standard of design, process management and internal policing. The SaaS consumer must frequently review processes, controls, intrusion logs and breach indicators through audit. In the event of a breach, all parties will suffer in the marketplace. These challenges will continue to increase in the never ending battle between those who wish to gain through ill-gotten means and those who wish to prevent them.

 

Most likely yes, there will be a point where it is less expensive to buy the licenses, but make sure the analysis takes into account the true total cost of ownership; the supporting team, hardware procurement and maintenance, operating system and software procurement and maintenance, network, network security, third-party certifications and overall service delivery.

 

 

The main benefits of a buying SaaS-based solution as opposed to those delivered through software licenses on premises equipment or thin-client applications include: low- to no-capital expenditures, quicker time to market, lower maintenance and operational costs, and minimal upgrade fees.  The unique "pay as you go" cost structure avoids the long term costs of multiple licenses that need to cover peak volumes even when usage declines and licenses stand idle.

 

Applications that are not core to a company's success and not highly customized to their business processes are the best candidates for SaaS. Historically, this has meant applications such as e-mail, collaboration, Web properties, and communications applications.  On the contrary, applications that are highly customized and tied to multiple back office systems tend not to be good candidates for SaaS because of multiple integration points.  Many complex applications that must be customized do not work in a SaaS model due to the standardization that is required for a SaaS application to be commercially viable.

 

Like the rest of the market, Verizon Business has seen tremendous growth in SaaS-suitable solutions, particularly in communication applications such as email and collaboration, as well as in remote monitoring and backup solutions.  Increased availability and reduced costs are key drivers behind the growth of SaaS.

 

Verizon Business sees more and more suppliers delivering solutions via a SaaS delivery model, driven by customer desire for the flexibility that the SaaS model brings.  While we anticipate seeing many solutions transition to the SaaS mode, not all will.

 

Customization is probably the largest challenge facing SaaS applications.  Service providers rely heavily on ISVs for software that can be deployed in a SaaS model.  The ability to customize SaaS applications has become easier as configurations for customers can be customized on a per user or company basis.

 

Software vendors continue to refine their licensing models, but in general, even for software that is purchased in the traditional model, there are maintenance costs each year for updates, including patches and security.  Many other factors affect the total cost of ownership for a solution, including deployment, customization, operational costs, hardware fees, datacenter fees, power, cooling, and security-those are all part of the equation.  SaaS provides businesses with unparalleled agility, allowing them to employ computing resources exactly and only
when needed via an agile and affordable infrastructure.

 

comments powered by Disqus