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| Version | User | Scope of changes |
|---|---|---|
| Mar 18 2007, 5:06 AM EDT (current) | david_terrar | 2 words added, 2 words deleted |
| Mar 7 2007, 1:38 AM EST | david_terrar | 2 words added, 3 words deleted |
Changes
Key: Additions Deletions
What is Software as a Service?
Traditionally companies buy, licence or build the software that they need and install it on their own computers and networks. They manage both the business process and the technology that supports it themselves. We call this On-Premise software. Typically On-Premise software is licensed at the start of a project with an on-going maintenance fee for support and new releases.
The SaaS approach is different. The customer is responsible for the business process, but the provider is responsible for the technology and its support. The application runs at the provider's facility and is based on a common set of code and data definitions consumed by customers in a one-to-many model. This is often termed 'muliti-tenancy' and refers to the fact that the provider makes the code available for consumption in a single instance to multiple clients. The service is usually paid for on an inclusive subscription basis and most providers let their customers discontinue at a month's notice. This means that retaining customers requires a laser focus on service.
Why should it be important to the financial management community?
SaaS provides an alternate model for delivering business processes. The most important difference is that a SaaS approach can help the customer or practice collaborate with staff, business partners and clients in ways that would be difficult or impossible with the On-Premise approach. Partners can have controlled access to a customer's system. Practices can easily share data with their clients, or analyse their entire client base to provide additional services, where the analysis would be very difficult across multiple physical locations or instances of the software.
What benefits can SaaS offer?
What are the risks and concerns?
Some people have expressed concerns over data security and the risk of service outtages. Most SaaS providers will offer similar access security to Internet banking, and a Service Level Agreement (SLA) which guarantees a better than 99.9%99% availability. A provider's backup and recovery strategy is usually much more comprehensive compared to that applied in on-premise scenarios. Overall, this should mean the risks associated with software are reduced. There are similar risks and concerns over the long term viability of the vendor compared to a traditional software company, but most providers allow easy access to data for import and export. Provider switching is therefore much easier than with On-Premise providers.
What should you look for from a potential SaaS partner?
Is SaaS right for you?
The rise of vendors like Winweb (118,000 users), Twinfield (25,000 users), Liberty Accounts and FreshBooks (135,000) users, all in the SMB space provides a strong leading indicator that SaaS has demonstrated value and fitness in the market. Salesforce.com, used by many SMBs for CRM, has achieved success with enterprises implementing thousands of users. Whether SaaS is right for your business is another matter.
In follow on articles we will extend the manifesto to discuss customer use cases from various SaaS vendors. As well as explaining how they are using their particular web service, we'll be highlighting the key reasons why they chose this approach over a conventional, on-premise solution.
For further reading, here are links to useful articles that give more detail and background on the SaaS topic:
From Nigel Harris of AccountingWEB:
Online accounting services buyer's guide
From Phil Wainewright of ZDnet:
SoSaaS: Same old Software, as a Service
Seeking the true meaning of SaaS
What to look for in a SaaS vendor
In SaaS, does trust depend on purity?
From Frederick Chong, Gianpaolo Carraro, and Roger Wolter of Microsoft:
Multi-Tenant Data Architecture
From Jim Holincheck of Gartner:
Clearing Up the Confusion About SaaS
Traditionally companies buy, licence or build the software that they need and install it on their own computers and networks. They manage both the business process and the technology that supports it themselves. We call this On-Premise software. Typically On-Premise software is licensed at the start of a project with an on-going maintenance fee for support and new releases.
The SaaS approach is different. The customer is responsible for the business process, but the provider is responsible for the technology and its support. The application runs at the provider's facility and is based on a common set of code and data definitions consumed by customers in a one-to-many model. This is often termed 'muliti-tenancy' and refers to the fact that the provider makes the code available for consumption in a single instance to multiple clients. The service is usually paid for on an inclusive subscription basis and most providers let their customers discontinue at a month's notice. This means that retaining customers requires a laser focus on service.
Why should it be important to the financial management community?
SaaS provides an alternate model for delivering business processes. The most important difference is that a SaaS approach can help the customer or practice collaborate with staff, business partners and clients in ways that would be difficult or impossible with the On-Premise approach. Partners can have controlled access to a customer's system. Practices can easily share data with their clients, or analyse their entire client base to provide additional services, where the analysis would be very difficult across multiple physical locations or instances of the software.
What benefits can SaaS offer?
- Implementation is generally much quicker than On-Premise and training costs are often lower because training occurs much closer to the point of service delivery.
- The software never requires customer maintenance. That is the service provider's responsibility. All bug fixes, patches and new features simply 'turn up.' This avoids the many problems associated with On-Premise updates.
- The one-to-many architecture allows some economies of scale and cost savings to be shared amongst the community of users. In addition the management of the IT environment is changed so that the SaaS customer only needs to support a basic, Internet connected device with a web browser. That means so-called legacy PCs can have a much longer useful life.
- The versioning issues associated with exchanging data files and worrying about software versions disappears.
- In addition, the practice or the client can now consider outsourcing some of the routine transaction recording work to lower cost locations.
What are the risks and concerns?
Some people have expressed concerns over data security and the risk of service outtages. Most SaaS providers will offer similar access security to Internet banking, and a Service Level Agreement (SLA) which guarantees a better than 99.9%99% availability. A provider's backup and recovery strategy is usually much more comprehensive compared to that applied in on-premise scenarios. Overall, this should mean the risks associated with software are reduced. There are similar risks and concerns over the long term viability of the vendor compared to a traditional software company, but most providers allow easy access to data for import and export. Provider switching is therefore much easier than with On-Premise providers.
What should you look for from a potential SaaS partner?
- Check that functionality matches your needs. Most SaaS providers are in 'early stage' development and do not offer all the bells and whistles found in other applications. But then they don't have the bloat that goes with it.
- Review the track record and reference sites. It can take 2 to 3 years to establish a stable SaaS business.
- Look for a "try before you buy" option. A good SaaS provider should have no fear of giving you a test run to check things out before you sign up.
- Check online performance. SaaS providers architect solutions for the web rather than retrofit. There is a palpable difference.
- Look for configurability. There should be options to configure your user environment for your particular business.
- Look for comprehensive service delivery. This should handle easy set up of new users, new companies, and configuration of user access for different levels of user.
- Review online help options, and an automated approach to tracking helpdesk issues. Obtain a copy of the SLA which should guarantee 99.9+%99+% availability?
- Finally, look for open APIs that make it easy for you to import and export data and connect the provider's web service to other services. The better SaaS providers realise that integration of different services is one of SaaS's key advantages.
Is SaaS right for you?
The rise of vendors like Winweb (118,000 users), Twinfield (25,000 users), Liberty Accounts and FreshBooks (135,000) users, all in the SMB space provides a strong leading indicator that SaaS has demonstrated value and fitness in the market. Salesforce.com, used by many SMBs for CRM, has achieved success with enterprises implementing thousands of users. Whether SaaS is right for your business is another matter.
In follow on articles we will extend the manifesto to discuss customer use cases from various SaaS vendors. As well as explaining how they are using their particular web service, we'll be highlighting the key reasons why they chose this approach over a conventional, on-premise solution.
For further reading, here are links to useful articles that give more detail and background on the SaaS topic:
From Nigel Harris of AccountingWEB:
Online accounting services buyer's guide
From Phil Wainewright of ZDnet:
SoSaaS: Same old Software, as a Service
Seeking the true meaning of SaaS
What to look for in a SaaS vendor
In SaaS, does trust depend on purity?
From Frederick Chong, Gianpaolo Carraro, and Roger Wolter of Microsoft:
Multi-Tenant Data Architecture
From Jim Holincheck of Gartner:
Clearing Up the Confusion About SaaS
