The document introduces Software as a Service (SaaS), explaining its evolution from traditional software installations to cloud-based access via the internet, which allows users to access applications without local installations. It outlines two main categories of SaaS: business-oriented services for enterprises and customer-oriented services for the general public, along with advantages such as lower costs and reduced storage requirements. The document also discusses SaaS's history, its impact on software ownership and delivery models, and compares it to the 'software plus service' hybrid model.

1. SaaS (Software as a service) Introduction by Arief Hamdani Gunawan Version 1.0

2. CONTENTS Stored remotely and access anywhere. Categories Ownership Advantages History Main Reasons Software Plus Service ASP Benefits

3. The Changing SaaS (Software as a service) changes the way software applications are stored and accessed . Traditionally software applications would be installed and reside on the same host machine, where they would be accessed from. However, SaaS changes this by hosting software applications on a remote server. These software applications and services are then accessed by remote users via the Internet.

4. Web-Based Email (1/3) Although most people probably don’t realize it, SaaS is more commonly used than they actually think. One of the most common uses of SaaS is for web-based email services. Popular web-based email service providers include Microsoft, Hotmail, Gmail, Yahoo Mail and many others.

5. Web-Based Email (2/3) These web-based email services are a good example of what SaaS basically is. Each web-based email service provider hosts all of their programs, information and data that are linked to the services they are providing (in this case web-based email access), in a remote centralized location. End-users can then remotely access these web-based email services and data which relates to them, via the World Wide Web using any normal web browser.

6. Web-Based Email (3/3) To summarize things, there are a few basic points that are common to all SaaS implementation. Software applications or services are stored remotely. A user can then access these services or software applications from anywhere in the world, via the Internet. In most cases, a user does not have to install anything onto their host machine, all they require is a web browser to access these services (although in some cases, a web browsers may require an additional plug-in or add-on for certain services). These simple set of points are common for all SaaS implementations, whether they are for business and enterprise use or even just for individual use.

7. Categories (1/2) Currently, there are two main categories of SaaS; these are business-orientated services and customer-orientated services. Business-orientated services This type of SaaS involves offering software solutions to companies or enterprises. The software is either sold in a traditional commerce way or it is made available to companies on a subscription basis. A number of applications and software services fall under this first category. However, in most cases they relate to business processes such as product management services or customer relations applications.

8. Categories (2/2) Customer-orientated services Customer orientated SaaS involves offering software solutions or services to the general public. Sometimes these services are offered on a subscription basis but in a lot of cases they are offered for free. Often, advertising is what make it possible for these types of consumer orientated services, to be offered for free.

9. Software Ownership (1/2) Normally a customer will purchase software along with a license (or licenses depending on how many copies they require), by paying a one-off fee. This is similar to buying any other product, whether it is software-based or hardware-based.

10. Software Ownership (2/2) A customer buys a software product and once purchased, that software product then becomes the property of the buyer. The customer now has full ownership of that software solution and can effectively use the software in any way they wish, as long as they do not break any of the terms and conditions (i.e. copyright terms) or licensing terms for that software. In most cases, once a software solution has been purchased, the vendor for that software solution will still provide software support in the form of upgrades and patches.

11. SaaS Ownership (1/2) In the case of SaaS, ownership of software solutions remains in the vendor’s hands. A customer does not buy a software solution or any licenses through a one-off fee. Instead they pay a recurring fee in the form a subscription (if the software solution is not one that is offered for free). The user then has access and permission to use that particular software solution, until either their subscription period runs out or they cancel their recurring payment.

12. SaaS Ownership (2/2) In a SaaS solution, ownership of software applications and services remain in the vendor’s hands because the software is not downloaded onto a user’s computer in any way. Instead it is accessed by a user remotely through the Internet using their web browser. This means that software vendors now have full control of their software solutions and do not have worry about consumers breaching their copyright terms or licensing terms.

13. The main advantages of SaaS for software clients (1/2) Briefly mentioned below are a few of the main advantages for of SaaS for software users. Lower costs – If a user only needed to use a software application for one month, it would be a waste of money for them to completely purchase this software application (especially for expensive software applications such as video editing, graphics, etc.). By using SaaS software solutions, consumers can save a lot of money. All they have to do is pay a subscription fee for one month or for the duration of time that they will be using an application for. This is a very cost-effective solution for users who may only use a particular software application on rare occasions.

14. The main advantages of SaaS for software clients (2/2) Reduced storage requirements – Some applications can take up a lot of hard drive space. By using SaaS software solutions, consumers can save a lot of hard drive space and in the long run this can save them money. Also, users do not have to worry about constantly backing up software data as this is all handled by the SaaS vendors. There are many more benefits to using SaaS software solutions for clients and only a few of the main ones were mentioned above.

15. The main advantages of SaaS for software vendors (1/2) Continuous income and greater profits – SaaS allows software vendors to profit like never before. Traditionally a client would purchase a software application, along with the number of licenses that they required and then that was it. A software vendor received very little from their clients after this initial purchase. However, SaaS now allows software vendors to receive a continuous stream of income in the form of subscriptions. In the long run, this means that software vendors are able to profit far more than they could before.

16. The main advantages of SaaS for software vendors (2/2) A reduction in piracy and unlicensed software – By keeping ownership of software applications in their own hands, software vendors can benefit from a reduction in piracy and unlicensed copies of their software being distributed. Again, this increases their profits because the amount of money that they are losing through piracy can be greatly reduced. There are many more benefits to using SaaS software solutions for vendors and only a few of the main ones were mentioned above.

17. 1990s (1/5) SaaS is a technology that first came of age during the 1990s. However, it was nearly lost in obscurity like many other new technologies that were emerging at that time, due to the dot com bubble bursting. Fortunately, SaaS was able to recover and it is now a software methodology that is widely used across the Internet.

18. 1990s (2/5) The initial problems for SaaS during the late 90s included the fact that most software applications were never designed to be remotely accessible. Software applications would always be installed on to the same machines on which they were going to be run on.

19. 1990s (3/5) Other factors which greatly hindered the progress of SaaS, being widely implemented during the 1990s included limited bandwidth availability and Internet speeds. Many clients and potential users of SaaS accepted the subscription approach to software services and hosted delivery of software services.

20. 1990s (4/5) However, because Internet connections were so slow at the time (maximum of 56kbs for most users), SaaS just wasn‟t practical. Bandwidth was also quite expensive, which made SaaS a very expensive solution at the time. It was far quicker and cheaper for businesses and individual users to install applications onto their local machines.

21. 1990s (5/5) Finally, software vendors were just not interested in changing their pricing models. At the time, most software vendors were happy with receiving immediate up-front payment for their software applications and tended t overlook the benefits that a subscription-based model would have for them. The major software companies like Microsoft, Oracle, etc., also just ignored SaaS and did not take it seriously.

22. Niche Markets As mentioned, a lot of technologies and concepts just faded with the burst of the dot com bubble, but SaaS was not one of these. To begin with, SaaS was just used in niche markets. SaaS was being used to address specific software problems and provide specific software services, in small specialized areas of a business.

23. Flexibility However with time, vendors like Salesforce, NetSuite and many more, began to develop purpose-built SaaS solutions, delivering them to customers in the form of subscriptions. This meant that businesses now had access to entire software solutions and could subscribe to as many of these services or as few of these services as required. This is one of the main reasons why SaaS solutions became widely adopted in the new millennium, because of the flexibility that SaaS offered.

24. Other Important Reasons (1/5) Of course flexibility wasn’t the only reason why SaaS solutions became so widely adopted in the new millennium. There were a few other important reasons which are briefly detailed below. Improvements in Internet speeds and an increase in availability In the new millennium, Internet speeds rapidly increased through the use of broadband technologies. The price of bandwidth was also getting cheaper which meant businesses could now purchase more bandwidth than ever before.

25. Other Important Reasons (2/5) This meant that SaaS could not only be implemented cheaply but it could now also work efficiently, without any lag or time delays that dial-up Internet connections would have caused. Also, more and more people were now connecting to the Internet and where there might not have been a market for SaaS before (because most people worked offline); there was one now (because people started to spend more time connected to the Internet online).

26. Other Important Reasons (3/5) Seeing things from a different perspective At first, software vendors were against using a subscription-based model for their software, they were happy receiving upfront payments. However, as the demand for Internet-based services increased, software vendors decided to change their stance by offering software services to consumers using a subscription-based model. This allowed software vendors to receive a continuous stream of income and profit far more than they could have by just using their traditional software sales model.

27. Other Important Reasons (4/5) Also, consumers were much happier using a subscription-based model because they would not have to pay large amounts of money upfront and had the ability to only pay for the services that they required. A subscription model in most cases also ensured that consumers would not be locked in by any licensing terms or a software vendor’s terms and conditions. For example, some software vendors would not offer refunds once a software application had been purchased. This meant that if a client purchased a software application and it was not as it was advertised making it useless to the client, then that client would have effectively lost their money.

28. Other Important Reasons (5/5) However, using a subscription-based model, a client has the ability to pay a fraction of a software application’s full price, without being locked in to their subscription in any way. This means that if a software application ends up being useless for a client, then they can cancel their subscription with a minimal loss of funds. SaaS is a relatively new technology when compared to other technologies, but it is now starting to be widely adopted by both businesses and home users. Advances in Internet speeds and bandwidth availability have made it both a very feasible software solution and a cheap software solution and it is now backed by major software and Internet companies such as Microsoft and Google.

29. Main Reason (1/6) Detailed below are some of the main reasons why SaaS was initially developed. To make the management and control of software easier Traditionally, software vendors would sell their software applications in the same way that any other product would be sold. Once a software vendor sold a copy of their software application, that was it, it was gone and the software vendor would lose control of it. Of course, by losing control of their software applications, these applications could now be easily manipulated or even illegally duplicated. By using SaaS, software vendors have complete control over their software applications. This also means that they can easily be managed and piracy can be controlled to a certain extent.

30. Main Reason (2/6) To take the management strain away from consumers A lot of time and money is spent by businesses on the deployment, management and updating of their software applications. SaaS completely eliminates this on the Customer’s side, because it is now the software vendor who deals with these issues when a SaaS solution is used. This is much better for both parties because software vendors are better equipped to deal with the management issues for their software applications while customers have one less strain on them.

31. Main Reason (3/6) To make software services available globally Because of the fact that SaaS operates across the Internet, software services can be accessed by anyone from anywhere in the world as long as they have an Internet connection. For people who travel often or constantly switch between machines that have different software applications installed onto them, this is very beneficial.

32. Main Reason (4/6) To provide a single instance of a software service to multiple users The great thing about SaaS for software vendors is that multiple users can access the same instance of a software service. Each user will see their own instance of a software service and their own data, without interfering with any other user’s data. This means that software vendors can save a lot of money and resources by running just a single instance of a software service, which can then be accessed by many users.

33. Main Reason (5/6) To create flexible payment models for software services Using SaaS, there are many different ways that a client can pay for software. For example they could pay a monthly fee, they could be charged based on the features that they use or on how much they used a particular software service, i.e. using a pay-as-you-go model. The good thing about this flexibility in pricing models is that the needs of many different users can be accommodated for. For example, larger companies could pay bigger upfront fees to save them money in the long run, while individual users could use a pay-as-you-go payment model to save them money in the short term and avoid paying large upfront fees.

34. Main Reason (6/6) Those were some of the main goals and objectives for SaaS when it was initially implemented. The main aim for SaaS however, was to take the management strains of software maintenance and deployment away from consumers, while at the same time putting control of software services back into the hands of software vendors.

35. Software Plus Service SaaS, involves making an application an entirely hosted one, which resides remotely outside of an organization's internal infrastructure. Although Software plus Service has a similar concept to SaaS, it is not quite the same. Software plus Service is something of a middle ground technology, where it provides the complete functionality of traditional software applications but also the benefits of external hosted software applications. This is achieved by installing an application in a traditional way, where they reside on a machine locally but by also complementing them with remote services, similar to the way in which a SaaS applications services are delivered.

36. More feature rich applications can be provided SaaS is great because it means that businesses do not have to install any application data onto their machines; however, there are a few setbacks to this (mainly because SaaS is still in its infancy). One of these setbacks is that certain features are currently just too difficult to implement across the Internet or run within web browsers efficiently. By installing certain features locally and then complementing these features with web-based features as well, a business can receive the best of both worlds. This is a good compromise for businesses who do not want to fully change their software application model to a SaaS-based one or for businesses who want to wait until SaaS catches up to the point where software services can be delivered with the same efficiency as if they resided locally.

37. Users can work offline With a SaaS-based software delivery model, users must be connected to the Internet whenever they want to use their software application services. Obviously this means that if a user is offline, then they are unable to access their software applications, which also means that it is very unlikely that they are able to get any work done (unless of course they have local backup applications but this would defeat the purpose of using SaaS-based applications in the first place). Software plus Service on the other hand, allows users to work offline (because important application data is stored locally). Once these users connect online, their data can then automatically be synchronized with their software service provider's servers. This is very advantageous to users who work remotely or users who are constantly on the move, because they can complete all of their work offline. They can then connect to the Internet when it is convenient for them and synchronize their data online, so that they can receive the same collaboration benefits that SaaS provides but of course without having to be constantly connected to the Internet.

38. Less Privacy Concerns One concern that most businesses have when switching over to a SaaS-based software delivery model, is how secure their data is. This is because when using a SaaS-based software delivery model, all of a business's data resides externally and it is up to the SaaS service providers to secure this data. By using the Software plus Service software delivery model, businesses have the option of controlling what data will reside locally and what data will reside externally. This means that a business could choose to keep private sensitive data stored internally, while less sensitive data could be stored on their software service provider's servers, to improve the efficiency of their software services.

39. Greater Customizability Traditional software applications are more difficult to customize for a business than SaaS software applications are. Although SaaS software services offer businesses more flexibility and the ability to customize their software experience (by picking and choosing the services that they want), SaaS does not quite offer the same level of customizability as Software plus Service does. Software plus Service allows businesses to customize their in house software, while also receiving the services that they require from a third party service provider, giving them a much more unique software experience that is specifically geared towards their business.

40. Software Plus Service and SaaS It is clear that Software plus Service offers some advantages that SaaS cannot currently offer. Software plus Service offers the benefits of being able to collaborate with a wide range of users via the Internet, while also taking advantage of more powerful PCs by running core application code locally. It is a great compromise between the traditional in house software approach and the Software as a Service approach. Software plus Service is great for businesses that want to receive similar benefits to having a SaaS software delivery model and for businesses that do not want to completely change their software delivery model to an outsourced external one.

41. ASP (Application Service Providers) SaaS providers and ASP are two terms that are often used to describe the same thing (the delivery of outsourced software applications via the Internet). Although both SaaS and ASP are very similar to one another, there are important differences between the two software delivery models. SaaS developed from ASPs and it was ASPs that first created the outsourced software delivery model.

42. ASP: Historical The ASP software delivery model first started being widely implemented during the early 90s. It was the ASP software delivery model that created the whole idea of hosting third party client/server software applications within an ASP organizations data centers, and then delivering these software applications to their clients via the Internet. The problem with the ASP software delivery model was that each client's applications or set of applications would require their own mini-data centre within an ASPs premises. This meant that ASPs would require massive data centers if they were going to host software applications for many clients.

43. Storing to own data centers Because so many different customer specific applications were being run within an ASPs data centre, ASPs just could not provide any help or documentation for each one of their clients' software applications. This meant that the clients of an ASP would still require their own in-house software experts and would still need to implement their own set of troubleshooting procedures, both of which were very costly. This is one of the major reasons why many businesses decided not to use an ASP to outsource their applications and instead decided to keep their software applications in-house. Businesses would have to pay software professionals regardless of whether they stored their software applications in-house or not, therefore instead of paying the additional cost of out-sourcing their software applications, most businesses decided to stick with their traditional software storage approach, by storing them within their own data centers.

44. ASPs failed A lot of ASPs failed because of two main reasons: firstly, most businesses decided not to use an ASP because the savings were just not enough to justify the decision to outsource their software applications. The second reason was that ASPs did not benefit from economies of scale. The more clients that an ASP had, the more expensive things became for them, because they would have to keep enlarging their data centers to meet their client's needs. In most cases this would eventually lead to an ASP not profiting at all or in the worst case scenario, even going bankrupt.

45. Delivery: One-to-one Vs Multiple SaaS software applications and services are different in the way that they are designed to be delivered, when compared to ASP software applications. ASPs delivered their software applications on a one-to-one basis to their customers. However, SaaS software services and applications are designed to be delivered to multiple customers. This means that SaaS service providers can benefit from economies of scale (many clients can access the same software application, while each client is delivered their own unique software experience). Also, SaaS service providers do not need to constantly keep increasing the size of their data centers, to meet their client's needs, which again improves their profits.

46. Delivery: Software Applications Handling Because SaaS providers are dealing with less software applications and services, they can also provide their clients with more application-specific documentation and can maintain and manage software applications themselves, preventing their clients from having to do all this, which of course saves them money. The SaaS software delivery model also provides clients with cheaper upfront costs when compared to the ASP software delivery model. This is because when a client uses an ASP, they still have to pay the full cost for the software applications that they are going to be using, because the ASP is only hosting a single copy of these software applications for them and no other clients.

47. Delivery: Cost However, when a SaaS software delivery model is used, service providers can provide the same set of services or software applications to many users. This means that the cost of these services can be divided up among a SaaS service provider’s clients and they can be provided with much cheaper upfront costs.

48. ASPs Todays (1/2) Although SaaS has effectively taken over from ASP as the dominant software delivery service, ASPs still exist today. However, the modern ASPs differ from the ASPs of the past, which failed. These days, ASPs either concentrate on a narrow range of software services instead of many different types of software services; ASPs offer their own set of specific software services, similar to the way in which SaaS vendors deliver their own set of software services. Most modern ASPs will function in a very similar way to SaaS service providers. This is mainly because the SaaS software delivery model has been proven to be a successful one and can provide benefits to both service providers and a service provider’s clients.

49. ASPs Todays (1/2) Using SaaS service providers to deliver software services, in most cases, is the best choice for businesses. SaaS software applications have a quick deployment time (no need to install the applications) and are much cheaper than ASP software services (due to economies of scale). However, in some cases, using an ASP may be the only choice that a business has. For example, if a business wanted to outsource a particular software application or set of software applications but these applications were not currently offered by any SaaS service providers, then they would have to use an ASP to outsource these software applications for them.

50. Benefits SaaS provides clients and businesses with a number of benefits. The main benefits of SaaS include: The potential to save money. The potential to save time. The ability to use your budget on business processes rather than on infrastructure-related processes. Access to the very latest technologies for a fraction of what this would normally cost.

51. Saving Money : Purchasing SaaS allows businesses to save money in a number of different ways. Firstly there are lower IT related costs when using SaaS software solutions in place of traditional software solutions. When a business purchases software applications in the traditional way, as well as the initial costs of purchasing this software (and licenses), there are a whole host of other costs. For example a business may have to purchase additional hardware to run this software on their machines, they have to secure the machines on which these software services run on and IT professionals are required to manage or troubleshoot this new software.

52. Saving Money : Installation Installing software in a traditional way can end up costing businesses a lot of money and often these extra costs are unforeseen. SaaS can save businesses money in the area of software management and installation, because software is installed and managed by SaaS software vendors. This means that all a business has to worry about when purchasing or subscribing to SaaS services, is how much the fee for the software service is. There are no hidden costs, no extra costs and businesses do not have to worry about licensing issues.

53. Saving Money : Multi-tenant Multi-tenancy or using multiple-tenant software services is another way in which businesses can save money. Multi-tenant software is any software application that can be used by more than one user or multiple users. Due to the fact that multiple users can share the same software application/service, subscription levels can be offered by SaaS vendors at much lower rates than if a software application was being used by users in a 1:1 ratio.

54. Saving Money : pay-as-you-go The third way in which businesses can save money using SaaS is by using a pay-as-you-go subscription model. A pay-as-you-go subscription model prevents the need for a large initial investment by clients when purchasing software services. Instead, businesses can either pay a monthly subscription fee (which they should be able to cancel at any time) or they can pay for exactly what they use.

55. Saving Money : payment method The good thing about paying for SaaS software services is that they offer flexible payment methods, meaning that businesses can choose the payment method that offers them the most benefits or the method that can save them the most money.

56. Saving Time : Installation Due to the fact that you do not need to install software applications yourself, you can save a lot of time. SaaS software solutions are already up and running on a SaaS vendor’s data centre, therefore you can begin using SaaS software solutions almost instantly.

57. Saving Time : Other Areas However, installation is not the only area in which time is saved. Time and valuable resources are also saved in other areas. For example a business does not need to waste time on managing or updating software applications, because once more, it is the software vendor who deals with these issues.

58. Saving Time : Different Machines Also, traditionally when software applications had to be used on a number of different machines, they would usually have to be installed on to each one of these machines (which is a time consuming process). However, by using SaaS a business can access the same software services on multiple machines without having to install anything. This can save businesses a lot of time, resources and even money.

59. Use their budget more effectively (1/2) Allowing a business to use their budget more effectively As mentioned before, when using SaaS, a business can save money and time on certain IT related processes or tasks (which can sometimes even be completely eliminated). A business can save money on or even completely eliminate the following procedures: Purchasing Servers or additional Server hardware to support the new software services in-house. Ensuring that the new software services are running in a secure, reliable and conflict-free stable environment. Maintaining and updating software services.

60. Use their budget more effectively (2/2) The above-mentioned procedures often have hidden costs and consequences that are not easily spotted by businesses. For example, it can be so easy to overlook or forget about the extra costs that maintaining software services, installing software patches and troubleshooting entail. By using SaaS, all of the above problems and procedures are virtually eliminated. This means that businesses can use their budget far more effectively on business-related processes, and a business’s workforce can concentrate fully on core business processes, rather than on software-related tasks and activities.

61. Historical Latest Software Versions With traditional software applications, you often have to wait a while for the latest version of that software application to be released. This is because it is not efficient for software vendors to release new versions of their software applications every time they make changes. Therefore software vendors release new versions periodically or after making a certain number of changes. Of course this means that businesses have to wait for new features to be released.

62. Latest Software Versions by SaaS SaaS: Giving businesses access to the very latest software versions SaaS changes this, because software vendors can immediately offer their updated software solutions to clients online in a cost-effective and efficient way. This means that clients can benefit from software innovations on an ongoing basis, because as soon as a software vendor makes changes or offers new and improved features, their clients can begin using them right away.

63. Upgrade Issues Sometimes, when a business installs software traditionally they face problems; for example, the latest version of a particular software application may not work as intended with their existing operating environment or with their existing infrastructure. This means that a business would have to completely upgrade their existing infrastructure or operating environment, to allow the latest version of a particular software application to function correctly. This is obviously very expensive and although there are other ways around this, SaaS is a great method to avoid having the problem mentioned above. By using SaaS, a business does not need to change their existing operating environment or infrastructure in any way. All incompatibility issues are dealt with on the software vendor’s side of things and they are the ones who will ensure that the software services they are providing run stably within their data centers.

64. Thank You Want to know more about SaaS? [email_address]