Software as a Service (SaaS) has the potential to transform the way information-technology (IT) departments relate to and even think about their role as providers of computing services to the rest of the enterprise. The emergence of SaaS as an effective software-delivery mechanism creates an opportunity for IT departments to change their focus from deploying and supporting applications to managing the services that those applications provide. A successful service-centric IT, in turn, directly produces more value for the business by providing services that draw from both internal and external sources and align closely with business goals.
This is the third article in our series about SaaS. The first two articles, which can be found by clicking here, focused on the details of developing SaaS applications and providing them to customers. This time, we'd like to turn the question around and look at SaaS from the perspective of the enterprise consumer: How can IT departments benefit from adding SaaS applications to their portfolio of services? What are the implications of adding externally hosted applications to an enterprise-computing environment? What will one have to do to get ready for SaaS? This article will address all these points and examine a few special cases in which it might make sense for your department to become a SaaS provider, as well as a consumer.
Simply put, SaaS can be defined as "software deployed as a hosted service and accessed over the Internet."
SaaS as a concept is often associated with the application service providers (ASPs) of the 1990s, which provided "shrink-wrap" applications to business users over the Internet. These early attempts at Internet-delivered software had more in common with traditional on-premise applications than with modern SaaS applications in some ways, such as licensing and architecture. Because these applications were originally built as single-tenant applications, their ability to share data and processes with other applications was limited, and they tended to offer few economic benefits over their locally installed counterparts.
Today, SaaS applications are expected to take advantage of the benefits of centralization through a single-instance, multi-tenant architecture, and to provide a feature-rich experience competitive with comparable on-premise applications. A typical SaaS application is offered either directly by the vendor or by an intermediary party called an aggregator, which bundles SaaS offerings from different vendors and offers them as part of a unified application platform.
In contrast to the one-time licensing model commonly used for on-premise software, SaaS application access is frequently sold using a subscription model, with customers paying an ongoing fee to use the application. Fee structures vary from application to application; some providers charge a flat rate for unlimited access to some or all of the application's features, while others charge varying rates that are based on usage.
On the technical side, the SaaS provider hosts the application and data centrally—deploying patches and upgrades to the application transparently, and delivering access to end users over the Internet through a browser or smart-client application. Many vendors provide application programming interfaces (API) that expose the applications data and functionality to developers for use in creating composite applications. A variety of security mechanisms can be used to keep sensitive data safe in transmission and storage. Applications providers might provide tools that allow customers to modify the data schema, workflow, and other aspects of the application's operation for their use.
Benefits of Consuming SaaS
Of course, just because you can add SaaS to your IT infrastructure is not by itself a reason to do it; there has to be a viable business reason, too. SaaS offers substantial opportunities for organizations of all sizes to shift the