Software as a Service Projections
From IDC
Over 65% of all new products offered by established ISV's will be based on Software as a Service by 2014.
From Gartner
By 2014, Software as a Service will account for as much as 16% of the total enterprise software market.
From Saugatuck Research
65% of all SMB's plan on adopting some form of Software as a Service by the end of 2011.
Software as a Service Overview
Workplace2go is a provider of Software as a Service (aka cloud computing applications) subscriptions, available for use over the internet on a pay-as-you-go basis. While the model of delivering Software as a Service is growing rapidly (a recent Google search resulted in over 17 million hits), it is a relatively new concept. Therefore, we have created this document to answer your questions about Software as a Service and help you better understand it.
Software as a Service - What it is . . .
Software as a service (SaaS) is a model for using software as a subscription service instead of buying the license and installing the application files on a local computer from a CD, or increasingly as a download from a vendor website.
According to technology analyst firm IDC, key characteristics of Software as a Service include:
- Network-based access to, and management of, commercial software.
- Server management from a central location rather than at each customer site.
Software as a Service is generally priced on a per-user basis for each application, with billing managed by a major credit card. Sometimes there are minimum user requirements, minimum subscription time periods, as well as additional fees for setup, extra bandwidth and storage.
Software as a Service - Who it’s for . . .
In the business-to-business arena, the Software as a Service model is most often focused on the small-medium business segment. Unlike large enterprises, smaller companies have:
- Little or no staff devoted to information technology, and the employees they do have are often stretched thin and are generalists in their knowledge and skills.
- Limited budgets, particularly for capital expenditures.
- More fluid needs for tools and people due to rapid growth and other changing requirements.
- Greater demands on time, as most small business owners and their employees wear multiple hats.
- Growing propensity to operate on a ‘virtual’ model, with employees working from home, at remote work sites, or from rented office space that is shared with other businesses.
The flexibility of software as a service is particularly attractive to small business owners –
- No upfront investment in money or time, and often no contracts.
- Ability to use powerful business applications without having to acquire the specialized infrastructure and staff needed to manage them.
- Power to mix and match applications or add and remove users as needed
- Freedom to work from any location.
Software as a Service - How it works . . .
The Software as a Service model requires primarily a web browser and an internet connection:
- The customer goes to a website and ‘buys’ a subscription – generally monthly – to the desired Software as a Service applications and number of users. An account is set up with a major credit card for billing.
- The person who places the order (who generally becomes an administrator) is given login credentials and a web URL for secure access to the Software as a Service application.
- Every user added to the account receives his/her own log-in credentials granting them web access to the Software as a Service application(s) for as long as needed and as long as specified terms are met.
Most Software as a Service vendors provide a secure web portal with additional services such as support, along with administrator access for changing the number of users or applications and maintaining other account information.
Software as a Service compared with traditional software licensing . . .
Using an application as a service looks and feels the same as if using it from a local PC or server, particularly with today’s fast and reliable bandwidth. Performance and availability generally are outlined and guaranteed by a Service Level Agreement (SLA).
- Traditional software is purchased as a license, with the application files delivered on a CD or downloaded from a website. As a license, what is purchased is the right to use the application, either by one user or on one computer.
- The buyer is responsible for ongoing management such as backups, patches and upgrades. Most software vendors offer annual maintenance fees and/or upgrade pricing for existing customers.
- There are no refunds for software no longer used or wanted.
Demonstrated advantages of the Software as a Service model . . .
- Since nothing resides on a single hard drive (with a few exceptions in which files must be installed locally), the application can be used from any internet connected PC, providing greater flexibility.
- With pay-as-you-go terms, you pay only for what you use.
- You’re never locked into a license, so there’s no obsolescence and no buyer’s remorse if something doesn’t work out the way you thought it would, or if requirements change. While purchased software cannot be returned, software as a service subscriptions may be cancelled.
- Reap the productivity rewards from an application whenever you want, without a commitment or big upfront investment in money or an evaluation process.
- Add or remove users as staffing needs change, and applications as business needs change.
- Predict and budget how much you will spend, and move the cost from a capital expenditure to a business expense.
- Redirect financial resources, people and time for other needs and priorities.
The final word on Software as a Service. . .
- Software as a Service vendors manage software as a core business with experienced, dedicated staff in professional data center facilities.
- Security, redundancy and resources are equal or superior to those of the largest, most sophisticated enterprises. With today’s security threats and the growing importance of information technology for productivity and competitive advantage, robust facilities are moving from ‘nice to have’ to ‘must have’.
- Bandwidth has become readily available (particularly with the growth of wireless) and highly competitive, making it more dependable as well as less expensive. Today, homes and offices are routinely equipped with high-speed, broadband internet access.
- You will have one less thing to worry about. No servers, systems or software to install, administer, backup, protect and upgrade.