Four key benefits of SaaS


SaaS is defined as:
– An application owned, delivered and managed remotely by one or more providers
– The provider delivers an application based on a single set of common code and data definitions which are consumed in a one-to-many model
– on a pay-for-use basis or as a subscription based on use metrics

The use of SaaS is maturing as the need for Business to transform into a Agile operation is increasing. Businesses needs to constantly look at ways to turn the constantly changing business environment into opportunities. Inevitably, business leaders who are looking for new ways to use computing power to meet their demands and prudently looking towards SaaS.

Here are the four key characteristics that differentiate SaaS from Other Software Approaches and make it more beneficial:

Tenancy – In a multi-tenant architecture, customers share some or all layers of the stack. Multi-tenancy can apply to: 1) the application layer only; 2) the application and server/processing layers; or 3) the application, server/processing, and database tiers. Since customers sharing the same code base can’t modify the code, customizations to the application (including custom tabs, custom objects, etc.) must be done through sophisticated configuration tools and stored in the metadata layer.

Payment model – SaaS is typically pay-as-you-go, on a per-user, per-unit-time basis. In contrast,on-premise, licensed applications typically require a large upfront license fee followed by a smaller monthly maintenance fee (usually around 18-22% of the license fee). Application outsourcing usually involves a large upfront license fee and monthly maintenance fee like on-premise software plus a monthly outsourcing fee paid to the vendor that is managing the infrastructure and application (which is sometimes the same vendor that published the software).

Responsibility for managing – The application SaaS vendors take responsibility for managing the application including performance, uptime, security, reliability, and scalability. In on-premise software, customers either mange these aspects in their own IT department or pay a hosting company or application outsourcer to do it for them.

Control of upgrade timing – SaaS vendors typically release two to four major upgrades and several smaller updates each year. Customers receive these upgrades seamlessly and automatically and little or no control over when they occur. In contrast, licensed vendors typically release upgrades every 12 to 18 months and allow customers to decide when to apply an upgrade. Because licensed upgrades often require significant time and cost, firms running traditional licensed software frequently skip upgrades, missing out on the benefits of the latest functionality.

The SaaS model has become increasingly popular during the last three to four years. More than 40% of organizations have used SaaS for more than three years.

  • Key drivers for transitioning from on-premises to SaaS are
    – Total Cost of Ownership (TOC)
    – Unrealistic performance expectations with on-premises solutions
  • Major drivers for future developments include:
    – replacement of on-premises solutions
    – net-new implementations
  • As per Gartner, nearly 90% of organizations surveyed expect to maintain or grow their usage of SaaS. Key drivers are :
    – cost-effectiveness
    – ease/speed of deployment

Source: The Process Factory Imperative Situational Applications Provisioning by Cordys

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  3. SaaS says:

    Another advantage to SaaS is the scalability. You can grow the service with your business or use the services that will benefit you now and add more later. Thanks for the post.

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