SaaS: A simpler software solution for business?30 May 2006
There has been much discussion among the information technology industry recently about Software-as-a-Service (SaaS) and the impact it could have on small to medium sized businesses. The business model has been hyped by some as having the potential to deliver several benefits to businesses through a simplification of the software licensing process.
SaaS can be utilised by both consumers and businesses in different ways for different advantages. For small businesses, it is the on-demand nature of the model that could deliver the greatest benefits.
The Business Intelligence Network has broken the concept down into three main areas:
- Software purchasing: Consumers and businesses may test and buy different types of commercially available software through internet downloads.
- IT service-oriented architecture (SOA): A flexible system of interoperating data and application software services, facilitating easier integration ¿ central management means that users can access applications remotely using the internet.
- Application services: Customers pay a third-party provider for the use application services, rather than paying to own them, reducing the level of investment required in software and hardware and allowing multi-service provision.
Purchasing software services in this way could benefit businesses of all sizes, as well as software vendors, in several key ways:
- SaaS allows businesses to effectively 'rent' software applications from a third party, meaning that the costs of purchasing licenses is eliminated.
- It is said to be easier to implement than bought software, allowing businesses to get applications up and running more quickly.
- This also affords businesses more freedom as it is easier to switch between providers should another deal prove more competitive, which contrasts with some of the larger software vendors.
- For vendors, SaaS can be delivered cost effectively and easily, promoting business success.
- Software which can only be accessed through a site controlled by the manufacturer could also reduce piracy as fraudsters have no opportunity to copy the product in its physical form.
Phil Rothwell, managing director of ecommerce software firm Actinic, told website ITWales: "The advent of broadband has breathed new life into the idea and for some applications, in particular ecommerce, it offers a great way for small businesses to get up and running quickly." Despite this he added: "It isn't perfect. Business risk is a real issue for any company with more than a few employees. After all, if you choose a small provider and it goes bust, so do your critical business applications. On the other hand, if you go with a large vendor, you may find your service being cancelled with minimum notice. That's why the vast majority of businesses continue to license software - to stay in control of their business."
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