The cloud model provides computing power to run a chosen solution, via an on demand platform. This method delivers significant innovations in virtualization and rapid deployment, combined with industry-leading security, to simplify business and improve a business’s bottom line. A key advantage to a SaaS/Cloud platform is that it requires no software to install or additional hardware to buy. This provides a number of additional benefits, such as dramatically reducing upfront costs, accelerating speed to market, and minimizing ongoing maintenance costs. Users are able to access to the software anytime, from anywhere. All the “nuts & bolts” are managed by the SaaS provider, who is also generally responsible for installation and operation of software, delivering a true solution, wouldn’t you like value delivered to your fingertips??
A key factor of SaaS, is “multi-tenancy.” Multi-tenancy means that the provider of SaaS serves a variety of clients of a single, properly architected solution, and thereby reducing the resources needed to manage each copy of the software. The cost of servicing the SaaS provider’s customer is typically lower than the costs surrounding the application of the classical model licensing. Because the SaaS model eliminates the need for a business to handle installation, set up and/or daily maintenance and upkeep, the SaaS provider is able to pass these significant savings on to their customers.
People often confuse SaaS with “Hosted Applications” and “Application Service Provider” (ASP), which are similar but with significant differences. The key differentiator of SaaS from ASP is that in the SaaS model the customer buys access to certain business functions, not really getting a license to the application. These advantages can be realized in thousands of ways depending upon the industry, the solution and the separation of functions within the application. A Hosted Application or an ASP doesn’t have a multi tenant architecture, each client works with its own copy of the software which is simply run on the providers “tin.” This approach requires the supplier to support multiple individual instances and conduct the maintenance and upgrades for each client independently – a costly endeavor that must be passed on to the customer.
Let’s have a look on main myths about SaaS.
Question: What prevents companies from taking advantage of a SaaS- platform to increase their profits and save money?
Myth #1. “My data needs to be in my basement for me to guarantee its security.”
A lot of clients, who are considering a SaaS solution, ask the same question: “Is it safe to use SaaS? I am concerned about keeping my confidential data safe and secure?”
Data security is a top priority for every company. Is your data protected now? Free e-mail services that are often used in companies are unsafe and put your data at risk. How are you exchanging data with your trading partners and internal staff? In addition, information leakage can occur from a server located in your office, usually the fault of employees (accidental or otherwise). Do you conduct regular off-site back-ups? Do you have a disaster recovery site with a mirrored copy of your data and if so, what are the monthly costs involved in this (clearly, this is not in your basement)?
The data that you use in SaaS solution is stored in highly secured data centers with 3 level access monitoring and data is only exchanged over encrypted channels. In addition to data access and transmission, within a properly structured SaaS program, the customers should enjoy a sophisticated global disaster recovery program whereby the data is mirrored and backed-up into secure, geographically diverse data centers. Software vendors care about their client’s information and it is in their interests as well to keep this information safe and accessible in the case of unexpected emergency.
Myth #2: “SaaS is a new or unproven approach.”
Business need to manage their risks, therefore, they are rightfully cautious about adopting new and unproven technology. Today the market of cloud computing is very diverse, there are a large number variety of categories of software from virtual IP-ATC to corporate portals, accounting software, custome relationship management, sales/prospect management, etc. There is no limit in acquisition of SaaS. Using SaaS does not restrict a customer’s ability to use the software solution; in a properly architected SaaS, they can make changes and adapt software to their needs just as they could with an “on premise” solution.
Myth #3: “The traditional on-premise software license model is cheaper than SaaS.”
When comparing the cost of acquisition or licensing of software in the classical on-premise scheme, some suggest that this approach is less costly than SaaS over 3-5 years.
It is essential to note that in this case we talk only about the cost of the license itself, but we do not mention indirect costs. It is also very important to discuss the categories of TCO (Total Cost of Ownership) that takes into consideration the cost of personnel, hardware (servers), the ongoing hardware service, deployment (to include the entire initial deployment process as well as the deployment of updates), the costs to update the software, maintaining disaster recovery sites, electricity, etc. If we calculate the TCO for the classical scheme and SaaS, it becomes clear that the real savings to using SaaS over 3 years is typically about 60%. Moreover, when using SaaS you are always on the most current version of the software, able to leverage all of its capabilities and taking advantage of any lessons learned or ideas gleaned from across a wide client base (corporate competitive advantages and secrets are excluded and maintained confidential!).