Analysts claim that by 2010, 30% of new software will be delivered via an SAAS model.
Variously termed “on-demand software,” the “ASP” model, or “hosted software,” SAAS is where you rent web-based software hosted at the provider’s site. For many companies large and small, SAAS is the best way to roll out new technology. SAAS has now proven itself and is here to stay.
The staying power of SAAS has arisen for several reasons:
- Low cost of entry. Instead of paying lots of money to roll out a complex solution across the entire company, customers can just roll out one test department of 20 people. The risk is very low if it fails, and they don’t have to involve their busy IT staff.
- Onus is on the vendor. If the vendor’s software is broken, they won’t be getting money from any customer for long. The company is motivated to fix the problem.
- The vendor works for the buyer. Customers don’t have to rely on their IT departments to install an application. Everything is running securely at the vendor’s location.
- Less-risky investment. Instead of spending $60,000 all at once, for example, customers pay for the software monthly—the monetary risk is lower and less scary.
- Vendors must provide a secure data environment, or they’re out of jobs. Most vendors understand that data must be backed up religiously, and security is the top priority. Customer’s IT departments are typically pulled in many directions and can’t be as focused on one solution. Customers can rest assured their data security is probably better with a hosted solution, not worse.
Some of these companies provide the software only in the SAAS model, and some provide both installed, licensed versions of their software as well as SAAS versions. Companies that provide both enable early rollouts of the software which let you begin using the software on the hosted site to determine the value first, before your IT staff installs it locally. Once you’re sure you’re getting business value, you can convert the data to run in your local environment.
Not all companies that provide SAAS do so at the same level. The following are questions to ask vendors to make sure you’re working with a reputable company:
- Evaluate how well the vendor has integrated its service operations into its core business.
- Many software vendors are experimenting with the software-as-a-service model. However, for many, this is an operational change that is inconsistent with their cultures as software product providers. Sometimes the processes for how the product and technology resources interact in delivering a service may not be well developed, mature, or agreed upon internally. When possible, get a clear understanding from your vendor of their internal operational commitments to a software-as-a-service delivery model. The value proposition that touts the advantages of having the same company build and manage the software will be of no value if that sentiment is not accepted and demonstrated across their operations.
- Many software vendors are experimenting with the software-as-a-service model. However, for many, this is an operational change that is inconsistent with their cultures as software product providers. Sometimes the processes for how the product and technology resources interact in delivering a service may not be well developed, mature, or agreed upon internally. When possible, get a clear understanding from your vendor of their internal operational commitments to a software-as-a-service delivery model. The value proposition that touts the advantages of having the same company build and manage the software will be of no value if that sentiment is not accepted and demonstrated across their operations.
- Where is the computer that will be used to serve my application?
- Is the data center where that computer is located staffed 24 hours per day, seven days per week? What staff is on-site?
- What physical security measures are in the data center?
- Is there redundant power such as batteries and generators?
- What cooling and fire-suppression systems are available?
- How many Internet service providers (ISPs) do you buy connectivity from?
- Do you have a disaster-recovery plan if your data center becomes unavailable?
- Are servers dedicated to each customer, or do multiple customers share a single server?
- What do you back up and how often? How long do you keep backups? Do you store backups off-site?
The SAAS project-tracking or time-management solution may be just what you need. Consider:
- It removes much of your IT cost.
- It reduces the risk involved in acquiring new software.
- It allows you to influence product and service quality via an ongoing relationship with the vendor.
- It gives you the flexibility to change usage commitments as business circumstances change.
- It allows you to predict more accurately your ongoing expenses, as your IT budget is tightened and scrutinized.
About the Author:
Curt Finch is the CEO of Journyx (http://pr.journyx.com), a provider of web-based software located in Austin, TX, that tracks time and project-accounting solutions to guide customers to Per Person/Per Project Profitability. Journyx has thousands of customers worldwide and is the first and only company to establish Per Person/Per Project Profitability (P5), a proprietary process that enables customers to gather and analyze information to discover profit opportunities. In 1997, Curt created the world’s first Internet-based timesheet application—the foundation for the current Journyx product offering. Curt is an avid speaker and author and recently published All Your Money Won’t Another Minute Buy: Valuing Time as a Business Resource.
