Article: Software as a service
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Software as a service
Software as a service (or SaaS ) refers to distribution model for software in which it is executed in a centralized data center, as opposed to product model in which software is licensed to the end-user or customer for execution on their own infrastructure.
The research firm Gartner defines SaaS as, “ hosted software based on a single set of common code and data definitions that are consumed in a one-to-many model by all contracted customers, at any time, on a pay-for-use basis, or as a subscription based on usage metrics”. - See also article on SaaS Monetization
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Relevance to software business
Challenges in SaaS
One version?
The typical model for SaaS is that there is a single version of the software available to customers at any given time, and customers are all upgraded at the same time. However, there are practical challenges to this approach, and considerable risk is undertaken at the time of upgrade. Thus one also sees SaaS offered in at least a couple of versions. As in the product model, a new version is created and customers are migrated over to it over a period of time.
Development issues
When software is simply invoked, rather than installed and administered by the end users, in some respects the development issues become simpler:
- The software is executed in a more controlled and uniform environment. The issues of supporing multiple platforms, peripherals, etc., are mitigated to a great extent.
- Privacy and data security are an important issues for many users, who are concerned about their resources residing in a central location beyond their control.
There are also aspects that become more challenging:
- Software scalability becomes a critical and often difficult issue.
Other issues are simply different:
- Security
Operational issues
The SaaS model places the operational responsibility with the software for installation and execution of the software. At least the infrastructure portion of this
Data center management is a major and increasingly important issue.
Business issues
One advantage of SaaS is often stated to be the subscription model for pricing, which creates an ongoing revenue stream to support ongoing development and maintenance costs for the software.
Risks and liability
The issue of legal liability is an even hotter topic as more users entrust their private data to remote software services, often referred to as "the cloud". The recommended article: Electronic commerce: Who carries the risk of fraud discusses these issues from a customer perspective and is a great reading for software users and vendors who follow a user-centric approach in their product development.
Monetization of Software as a Service
Summary of the research literature
Practical perspectives
Opportunities for research
Links
- See Opsource.net for a list of SaaS Case studies