SaaS (Software as a Service) involves hosting applications online and providing access to customers via the internet on a pay-per-use basis. Some key benefits of SaaS include lower upfront costs than purchasing software licenses, reduced IT requirements as maintenance is handled by the provider, and the ability to access applications from anywhere. However, SaaS also presents security and availability risks if the provider's systems go down. Service level agreements are used to define the service quality customers can expect.

1. Software as a service (SaaS) Brief description, pros and cons

2. SaaS model – short history Introduction of this model is dated to year 1999, when it was called „service based software“ Phrase „Software as a service“ was introduced few years later in publication „Strategic Backgrounder: Software as a Service“ Sometimes, we can encounter phrase „Service on demand“, which is referring to the same subject as SaaS Nowadays, we‘re surrounded by software provided in this way

3. SaaS model – what makes the difference? Standard software Software is usually bought once for fixed price and physically installed in customers environment Additionally it is possible to pay for licenses (i.e. user licenses) Implementation or installation is made on customer‘s hardware Maintenance of hardware and underlying software (operation system) is performed by customer‘s IT Underlying software and hardware is also bought directly by customer from third party Customer‘s IT department has responsibility for availibility of software Software as a service Software is not installed on customer‘s hardware, nor the database – software is provided as a service Sometimes it is possible to pay some small initial fee for software Usually, monthly or annual fee is paid for using software (it could be paid per company, or per user) There is Service Level Agreement (SLA), that defines properties of provided service, such as availibility Data are usually held in supplier‘s database, so No Disclosure Agreement (NDA) must be signed too Customer has to have only client hardware and software, that can connect to the software (usually via internet)

4. SaaS model – simple graphic representation Standard software model Client PC Application server Database server Client PC SaaS model Client PC Application server Database server Client PC Customer‘s hardware Service provider‘s hardware

5. SaaS model – some basic math Standard CMS software (5 users) Purchase of server hardware (2 servers): 4.000USD Purchase of basic server software: 2.000USD Purchase of application (including implementation): 10.000USD Purchase of data store (database application, backup device, NAS, …): 3.000USD Monthly fee (application maintenance, server maintenance, licences): 2.000USD CMS software as a Service (5 users) Purchase of server hardware (2 servers): 0USD Purchase of basic server software: 0USD Purchase of application: Usually 0USD Purchase of data store (database application, backup device, NAS, …): 0USD Monthly fee (for using software): 300USD per user That makes 43.000USD first year, and then 24.000USD annualy That makes 18.000USD first year and then 18.000USD annualy

6. SaaS model – some basic math II. Chosen prices are only indicative, but real software and hardware prices was used as basis There was not counted on with periodic investments into changing/upgrading server hardware – this is only matter of standard software, not the SaaS (so you can think up new expenses) Purpose of this basic math was to show, that with SaaS could be achieved considerable cost-cutting, without losing critical functionallity in customer‘s software Purpose of this basic math wasn‘t to show precise comparation of two concrete products

7. SaaS model - benefits Software user doesn‘t need to maintain server hardware and underlying software (such as server OS), that brings following benefits: Nearly no purchase money for software Customer don‘t purchase the hardware Lower staff requirements for running software (no special staff needed) Cash-out for software is distributed in smaller amounts into longer period Customer can use software for short periods or move to another supplier, that brings cost savings Supplier guarantee properties of provided software based on SLA Usage of software is location independent Software is kept up to date by supplier Customer gets perfect technical support Customer simply doesn‘t need to care about operational issues related to the software. Customer just use the provided service.

8. SaaS model – limitations and risks Supplier and customer must ensure high security precautions Even if there is NDA signed, there is risk of information leak SaaS software is usually provided over internet (often HTTP or HTTP/SSL protocol), that means: there is possibility of hacking attempts stable internet connection is a must (for both – supplier and customer) SaaS providers often doesn‘t offer individual upgrades of software If service is unavailable and it‘s critical for core business of customer, it can cause major problems for customer (this risk must be prevented by supplier and customer) SaaS has its own limitations and risks, but majority of them can be prevented by choosing good and experienced supplier.

9. SaaS model – Service Level Agreement Most people has seen Service Level Agreement (SLA) for example if you decide to buy web-hosting, you look at parameters such as available disk space, connectivity and availibility It is contract between supplier and customer, that specifies properties of delivered service and penalties, if the properties are not fulfilled Usually we encouter this basic attributes of SLA: Availibility of software Disk or database space Number of users Paid plugins or addons

10. SaaS model – final word Typical examples of SaaS are: Google Apps Cargopass ESKER on Demand applications Mint.com and many many more… SaaS is perspective, relatively new method of providing software to end-users, which I personally could only recommend.