SaaS stands for Software as a Service and refers to software deployed and managed remotely by a vendor and delivered to customers over the internet. Key characteristics include multi-tenancy, usage-based pricing, and centralized management and upgrades by the vendor. The primary drivers of SaaS adoption include customer demand for flexibility, changing economic conditions favoring operational over capital expenditures, and technological advances. Benefits to customers include lower costs through a pay-per-use model with no large upfront fees, while vendors benefit from economies of scale and better understanding of customer usage patterns.

1. What is Software as a Service?
Introduction, Trends and Perspectives in Software as a Service
William M. Blake
President, eDocument Sciences, LLC
Phone: (716) 913-6676
e-mail: blake@edocumentsciences.com
www.edocumentsciences.com

2. What is SaaS?
SaaS = Software as a Service
• Deployment/Delivery model
– Hosted and Managed by vendor
– Delivered across the Internet
• Business model
– Usage-based pricing vs. perpetual license model
• Per user per month
• Per transaction
• Per GB of storage per month

3. Definition of SaaS
• Software offered as a service to multiple customers with the
following main characteristics:
• Standardization of software – eventually
customized for specific customers and
markets
• License based on usage – pay-as-you-go
• Service includes maintenance, support
and upgrades
• Data storage at SaaS vendor
• Web-based through Internet browser

4. Primary Drivers of SaaS
 Customers want a choice
 Changing economic & ecological conditions
 Changing competitive forces
 Changing workplace requirements
 Changing technologies
 Changing priorities & sourcing policies

5. Benefits of SaaS - Customers
• Lower entry point
– No large up-front investment in
• Software licenses
• IT infrastructure
• Lower operating/maintenance costs
– Fast, easy deployment (Web browser)
– Vendor maintains/upgrades application
– No IT staff necessary to keep running
• Consumption-based expenditure
– Pay As You Go (OpEx vs CapEx)
– Scale up/down as needed

6. Benefits of SaaS - Vendors
• Economies of Scale
– Derived from Multi-tenant architecture
• Better resource utilization
• Simplified maintenance
– Operating costs per customer drop as customer base grows
• Better understanding of usage patterns
– Drive innovation and enhancements
• Faster release cycles keeps up with market/competition
• De-facto access to Global market

7. What makes an application SaaS?
• Network-based access to commercially available software
• Multi-tenancy (one-to-many)
• Payment Model
• Central Application Management
– Software
– Infrastructure
• Control of Upgrade Process

8. SaaS vs. ASP
• ASP: Application Service Provider
– Single-tenant architecture (one customer per instance)
– Multiple instances running (as many as there are clients),
typically hosted by third parties
• Disadvantages
– Significant management overhead
– Difficult maintenance
– No economies of scale

9. SaaS Model
SaaS is different from on-premise software in more ways than one.

10. Business Functionality of SaaS
• Client/User Registration & Management
• Provisioning
• Billing & Payment Processing
• Performance Monitoring
• Usage Metering & Tracking
• Reporting
• Customer Service & Self-Service

11. SaaS Business Model Implications
• New sales & marketing approach
– Greater emphasis on web-centric cycle
• New sales & marketing compensation
• New release cycles and maintenance model
• New deployment/delivery approach
• New/higher expectations on customer service
• Uptime and SLA
• Professional Services

12. Shortcomings of Legacy on-premise Apps
• Deployment Challenges
– 31.1% of SW projects cancelled before completed
– 52.7% of projects cost nearly 190% of original estimates
• Operational Costs
– Maintenance & management costs >10x original license fee
– Escalating hardware & staff support costs
– Over provisioning and under-utilization of SW licenses
• Economic/Budgetary Pressures
– Need to reduce IT costs and increase business benefits
– Need to increase utilization to gain greater ROI

13. Changing Customer Expectations
Old New
• Capital Investment  Operating Expense
• Complex, Customize  Simple, Utilization
• Reactive Maintenance  Proactive Management
• Response Time  Ongoing Monitoring
• Customer Support  Automated Delivery
• Limited Responsibility  Higher Accountability
• Outsourcing Alternatives  Out-Tasking Options
Enterprises Seeking to Generate Greater ROI
at Lower TCO.

14. Equation for Greater Opportunities
Economy Tighter = Greater SaaS
+
Uncertainty Budgets Opportunities

15. SaaS Adoption Today
Source: THINKstrategies/Cutter Consortium © 2007

16. SaaS Deployment Plans
Source: THINKstrategies/Cutter Consortium © 2007

17. Gartner’s Slope of Enlightenment
Gartner’s Hype Cycle
You are here.

18. Living in a Hybrid World
• Most enterprises will seek mix of on-premise and
on-demand solutions
• Users prefer choice
• Users seeking on-demand/on-premise integration
• ‘Applets’, Appliances, etc. will permit off-line use and
synchronization