Thursday, March 13, 2008

Sushant Mohanty's Blog

Sushant Mohanty's Blog

SAAS (Software As A Service) – A Trend To Understand And Adopt

1-The Buzzword
2-Market Trends
3-Design Concepts of SAAS Model

The Buzzword:
SAAS – It is nothing but a new software delivery method. In this model, company’s day-to-day business services are delivered to the users over the internet. The concept is easy and very effective: rather than buying and installing applications that support commodity processes like accounting, CRM, payroll and, procurement, companies use “pay-as-you-go” model to access the applications hosted by third party companies. This service delivery model is one-to-many, where an application is shared by multiple companies with their set of functionalities and customization.
A key objective of this model is that the SaaS provider invests in the technology, hardware and ongoing support services, instead of the client, giving the buyer more flexibility to switch providers and reduce the complexity of software maintenance.

Market Trends:
According to IDC, the worldwide market for Software as a Service (SaaS) is healthy and growing stronger every day and the worldwide spending on SaaS will continue to increase. IDC predicts that 10% of the market for enterprise software will adapt to pure SAAS model.
In a recent study by AMR Research, the survey found that:
- 61% of firms will likely support SaaS for one or more of their ERP business processes by year-end 2007
-52% of firms will likely support SaaS for one or more of their Supply Chain Management business processes by year-end 2007
-56% of firms will likely support SaaS for one or more of their CRM business processes by year-end 2007
-49% of firms will likely support SaaS for one or more of their Human Capital Management business processes by year-end 2007

I have so far identified 3 key reasons for businesses to consider and adopt SAAS.
1. Reduce IT Business Cost (TCO)
2. Improve IT Business Operations
3. Create Business Value

Reduce IT Business Cost:
SAAS business model eliminates the cost associated with software license, project implementation, and hardware and post implementation operations. It is simply a subscription per user delivery model

Improve IT Business Operations:
Maintaining an application is more painful than building it. A mission critical application needs 24/7 availability and support staff to manage it. To sum it up, a company needs to have a sophisticated data center with high end backup and recovery capabilities. SAAS eliminates all these burdens from the consuming entities and make the service provider responsible for it.

Create Business Value:
For many companies where IT is not their core business competency, spending large portion of corporate budget on IT and manage a large IT operation takes out their focus from the main business competencies. With SAAS, companies can outsource their commodity processes like accounting, CRM, payroll and , procurement to a third party company and focus more on their core business capabilities.

Design Concepts of SAAS Model:
SAAS is normally a web based application supporting large numbers of end users in multi-client or shared application environment.

End users can access the SAAS based application using internet/web. Service providers host the applications in their infrastructure and stores the user data in either a dedicated database or in a shared database instance. Users connect to application using secured infrastructure. SaaS requires an architecture that can support peak usage demands and process millions and millions of transactions in a secure and reliable environment.
Key implications in SAAS architecture are scalability, configurability, multi-tenant efficiency and data integration.

As SAAS will be accessed by large volume of users simultaneously over the internet, SAAS delivery and consumption architecture must address very high end throughput.

SAAS is an on demand virtual application service delivery model, where the enterprise users will access the application as it is built just for them and catering specific their business need. In simple term SAAS is a self service or configurable application.

SAAS delivery model normally supports 3 delivery models
-single tenant with dedicated application instance or
-multi-tenants sharing a single application instance
-multi-tenants sharing dedicated application instances

Data Integration:
Even though companies have SAAS access for commodity processes like accounting, CRM, payroll and, procurement they still have some home grown applications that is custom built for their business processes. Integrating in house application with SAAS systems need thorough understanding of SOA and enterprise integration.

SAAS is a very emerging technology concept and is the new kid in the block. With pressure rising on CIOs and IT executives to cut down spending on IT operations and improved customer delivery, more and more IT executives are trying to put SAAS in their IT portfolio.