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It its Worldwide Partner Conference in Denver last week, Microsoft played up its “software plus services” vision, the company’s take on the Software-as-a-Service market it has been edging toward for years and will cannonball into later this year with its on-demand, hosted CRM Live service. The vendor’s message to partners was sharp and to the point: SaaS is here to stay, so adapt accordingly.
“This is a hard transition. It was a hard transition for us to accept a couple of years ago, and it’s one that’s full steam ahead at Microsoft. This is a different business model,” Microsoft COO Kevin Turner said in the show’s opening keynote. “My call to action for you today is: ‘Look, this is going to happen. Software plus services is imminent. The customer is going to want the choice. We’ll help you, we’ll work with you, but this change is going to happen.’ “
From Wikipedia, the free encyclopedia:
Software as a service (SaaS) is a software application delivery model where a software vendor develops a web-native software application and hosts and operates (either independently or through a third-party) the application for use by its customers over the Internet. Customers pay not for owning the software itself but for using it. They use it through an API accessible over the Web and often written using Web Services or REST. The term SaaS has become the industry preferred term, generally replacing the earlier terms Application Service Provider (ASP), On-Demand and “Utility computing”.

Key characteristics of software delivered by SaaS
The key characteristics of SaaS software, according to IDC, include
· network-based access to, and management of, commercially available (i.e., not custom) software
· activities that are managed from central locations rather than at each customer’s site, enabling customers to access applications remotely via the Web
· application delivery that typically is closer to a one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, including architecture, pricing, partnering, and management characteristics
· centralised feature updating, which obviates the need for downloadable patches and upgrades.
SaaS applications are generally priced on a per-user basis, sometimes with a relatively small minimum number of users, and often with additional fees for extra bandwidth and storage. SaaS revenue streams to the vendor are therefore lower initially than traditional software license fees, but are also recurring, and therefore viewed as more predictable, much like maintenance fees for licensed software.
Drivers for SaaS adoption
The traditional rationale for outsourcing of IT systems is that by applying economies of scale to the operation of applications, a service provider can offer better, cheaper, more reliable applications than companies can themselves. The use of SaaS-based applications has grown dramatically, as reported by many of the analyst firms that cover the sector. But it’s only in recent years that SaaS has truly flourished. Several important changes to the way we work have made this rapid acceptance possible.
· Everyone has a computer: Most information workers have access to a computer and are familiar with conventions from mouse usage to web interfaces. As a result, the learning curve for new, external applications is lower and less hand-holding by internal IT is needed.
· Computing itself is a commodity: In the past, corporate mainframes were jealously guarded as strategic advantages. More recently, the applications were viewed as strategic. Today, people know it’s the business processes and the data itself—customer records, workflows, and pricing information—that matters. Computing and application licenses are cost centers, and as such, they’re suitable for cost reduction and outsourcing. The adoption of SaaS could also drive Internet-scale to become a commodity..
· Applications are standardized: With some notable, industry-specific exceptions, most people spend most of their time using standardized applications. An expense reporting page, an applicant screening tool, a spreadsheet, or an e-mail system are all sufficiently ubiquitous and well understood that most users can switch from one system to another easily. This is evident from the number of web-based calendaring, spreadsheet, and e-mail systems that have emerged in recent years.
· Parametric applications are usable: In older applications, the only way to change a workflow was to modify the code. But in more recent applications—particularly web-based ones—significantly new applications can be created from parameters and macros. This allows organizations to create many different kinds of business logic atop a common application platform. Many SaaS providers allow a wide range of customization within a basic set of functions.
· A specialized software provider can target a global market: A company that made software for human resource management at boutique hotels might once have had a hard time finding enough of a market to sell its applications. But a hosted application can instantly reach the entire market, making specialization within a vertical not only possible, but preferable. This in turn means that SaaS providers can often deliver products that meet their markets’ needs more closely than traditional “shrinkwrap” vendors could.
· Web systems are reliable enough: Despite sporadic outages and slow-downs, most people are willing to use the public Internet, the Hypertext Transfer Protocol and the TCP/IP stack to deliver business functions to end users.
· Security is sufficiently well trusted and transparent: With the broad adoption of SSL organizations have a way of reaching their applications without the complexity and burden of end-user configurations or VPNs.
· Availability of enablement technology: According to IDC, organizations developing enablement technology that allow other vendors to quickly build SaaS applications will be important in driving adoption. Because of SaaS’ relative infancy, many companies have either built enablement tools or platforms or are in the process of engineering enablement tools or platforms. A Saugatuck study shows that the industry will most likely converge to three or four enablers that will act as SaaS Integration Platforms (SIPs).
· Wide Area Network’s bandwidth has grown drastically following the Moore’s Law (more than 100% increase each 24 months) and is about to reach slow local networks bandwidths. Added to network quality of service improvement this has driven people and companies to trustfully access remote locations and applications with low latencies and acceptable speeds.
Companies like Salesforce.com are working on SaaS model and are well known in the industry.

While Salesforce who already a leader in CRM.

Concluding the above we can say that SaaS has come and its here to stay as the Web evolves.

This entry was posted on Monday, July 16th, 2007 at 5:14 am and is filed under Breaking News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.