TREND: Software as a Service “SaaS”
Posted by egovindia on August 5, 2006
Software as a Service
Chirasrota Jena examines a trend that could reshape the competitive framework of the enterprise software market
As a new method of delivering software to the enterprise, Software as a Service (SaaS) marks the decline of the software-licencing era. SaaS is gradually reshaping the competitive framework in the enterprise application market, and SaaS application vendors are growing faster than traditional ISVs. SaaS is an emerging software delivery model in which application software is delivered remotely through a subscription-based fee rather than being sold for perpetual use. Companies in India are increasingly looking at delivery and collaboration of software over the Web. Although different providers are approaching SaaS in different ways (SOA, On Demand, etc), they will ultimately belong to the same pool of SaaS.
The delivery and remote access of software applications via a Web browser is the next mantra that will drive enterprise productivity. SaaS allows the company the flexibility of using an application as and when it wants to, without having to bear the cost of buying it and thereby forcing its use. This concept makes it much more viable in the Indian context since customers are cost-conscious. A few players have already introduced the concept—Salesforce.com, NetSuite and WebEx, to name a few. A number of system integrators as well as vendors such as Google, Yahoo and Microsoft are also offering the service.
SaaS is a full suite of options that you can order along with a software application. Explains Kiran Datar, Managing Director, WebEx Communications India, “You get maintenance and technical support in addition to the application itself. The key element in this arrangement is the network. One of the not-so-well-disguised requirements of SaaS is that, in order for the provider to offer services such as main-tenance and technical support, the services must be provided over a network.”
Software on tap
The software that is being offered by different vendors include payroll, accounting, web conferencing, workforce management, sales force automation, content / document management, and messaging. Salesforce.com is offering customer relationship mana-gement (CRM) through SaaS. Informs A Rajendran, Director, Information Services, Team Computers, “Transaction Data Capture systems for SMBs are a good candidate for SaaS in the ASP model. These include CRM (Microsoft), SFA (SalesForce.com), ERP and the like, which are key support and core functions of organisations. For big companies, large systems of this category would at best be hosted on data centres, and potential pay-as-you-go models can be expected to come.”
Web Conferencing and Collaboration currently represent the largest portion of the total SaaS revenue in India. However, a number of other software market sectors are now gearing up for a SaaS push. The segments in particular that appear poised for strong SaaS advances are ERP, supply chain management, and human resource applications. Informatica delivers a comprehensive, multi-tenant, hosted data integration platform designed to meet the needs of a wide variety of SaaS, BPO and ITO service providers.
Platforms for SaaS
Vendors are using different platforms though there are some players whose software can run on any platform. Says Ramendra Mandal, Country Manager of Informatica, “Built on Web 2.0 infrastructure, users will be able to integrate data across multiple outsourcing service providers and on-premise applications without installing any software.” The Informatica On-Demand Data Integration platform will be generally available as a new product in the first quarter of 2007.
Meanwhile, Team Computer is using a BI platform for offering SaaS, along with a codeless application development platform. Notes Rajendran, “We package both along with our IP of KPIs and implementation methodologies, and deliver as a SaaS Service. This is aimed at helping the top management to get a unified view of the enterprise without having to bother about the methods or tools to be used for data integration, unified master management, MIS, reporting and analytics.”
Most companies are opting for SOD (Software on Demand) rather than ASP (Application Service Provider). Comments Datar, “The choice between the two depends entirely on the business strategy and cost benefits. Indians are basically cost-conscious, and Indian companies are adopting SaaS in a big way to run their global businesses because they have limited IT budgets.” According to Datar, the software provided by WebEx under SaaS can run on any platform. The packaged application is hosted as a service and is either installed and managed at the service provider’s site, or it can be deployed in-house at the customer site; it is overseen by the IT staff that is employed by the service provider.
In the wake of organisations looking at combating the spiralling costs of owning licenced software and upgrading it subsequently, the SaaS model will provide huge benefits for companies in terms of cost when there is a shift from their capital expenditure to their operating expenditure. Informs Mandal, “The subscription model by SaaS will enable customers to have a computing environment that scales up or down as demand dictates, with a seamlessness and continuity that minimises or eliminates disruption for end users, and with flexible pricing.”
States Datar, “A study by Springboard Research showed strong growth in SaaS adoption levels in India and across Asia in 2005, and even brighter prospects ahead. India saw revenues increase over 53 percent to $7 million in 2005, and the market is expected to grow to $48 million by 2008, representing the fastest growth in the region.”
The SaaS business model will continue to gain traction in the coming years. Customers no longer want to be locked in to three-or five-year software licences. Successful companies will see the world from their customers’ point of view, and offer low-priced, flexible software.