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Thinking about Software as a Service (SaaS)
We believe that SaaS (Software as a Service) is going to have a major impact on the software industry. SaaS will change the way people build, sell, buy, and use software. The concept behind software as a service is simple. Instead of a software vendor selling a software license that the client then implements and maintains in its own environment, the vendor -- or, more properly, the service provider -- hosts the application on its own computer in its own data center and provides access to the system over the internet on a subscription basis.
For the SaaS model to be put into effect, the vendor will need to evaluate its traditional application. The development of higher-quality, cost-efficient applications -- in a fraction of the time -- is a necessity as the vendor strives to drive a business based on SaaS.
This paper highlights the application development shifts that vendors must go through to accommodate SaaS; and provides a detailed analysis of how the Servoy platform has become the number one choice for vendors wishing to develop and deliver SaaS applications.
SaaS often requires new application development
While the benefits of SaaS for customers are numerous and the business potential for vendors rapidly increases, challenges exist for software companies planning to move to a SaaS business model. Many vendors are struggling with their traditional application software. In order to successfully implement the concept of SaaS, they must provide an application platform that will ensure configurability; multi-tenant efficiency; scalability; and ensure consistant, end-to-end operation of business-critical applications with the same quality of service as before.
Most vendors are faced with upgrading their (aging) traditional systems or building new applications to support the new concept. Traditional systems were often developed with programming languages (3GL and 4GL environments) and database systems that are difficult and time-consuming to change. New development lifecycles on these systems are too slow and too rigid to meet the rapid changing business demands of SaaS. Therefore vendors need to reevaluate the programming language, especially for those applications that are hard to upgrade to the new concept, as the SaaS model itself requires adaptive and continuous fast changes. A new development tool must be considered -- one that allows organizations to build software applications faster, better and cheaper.
The economic characteristic of SaaS
Software as a service is a growing approach to delivering business applications. For companies that have implemented some form of software as a service, the economic results are positive. According to a 2006/2007 survey of Computer Economics, there is no doubt that consumer adoption rates are greatly increasing. As this survey shows, 57% of vendors indicate that economic benefits exceeded the cost of the investment, while 34% report a breakeven ROI. Only 9% of respondents indicated a negative ROI for software as a service.
Realizing the benefits of SaaS requires shifts in thinking on the part of the vendor. The goal shifts to targeting smaller businesses or departments, by reducing the minimum cost at which software can be sold and creating an economy of scale. A SaaS vendor with x number of customers subscribing to a single, centrally-hosted software service enables the vendor to serve all of its customers in a consolidated environment. The SaaS model can only be realized by standardization; easier and faster software development; and lower maintenance. Only with the right development tool can SaaS vendors offer solutions at a much lower cost than traditional vendors.
Investment in SaaS oriented development environment
The economy of scale is an important business rule for SaaS. Therefore SaaS applications are built to scale well. The operating cost for each customer will continue to drop as more customers are added. As the number of customers increases, the SaaS provider will develop multi-tenancy as a core competency, leading to higher-quality offerings at a lower cost.
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