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 In spite of many challenges, the Software as a Service (SaaS) market is growing faster than the traditional packaged software application market. IDC, global provider of market intelligence, predicts that worldwide spending on SaaS, which totaled $4 billion in 2004, will reach $10.7 billion by 2009. however, another eye catching research data by Gartner says, SaaS represented approximately 5 percent of business software revenue in 2005 and by 2011, 25 percent of new business software will be delivered as SaaS. Discussing this growth opportunity for India Satish Syal, Executive Vice President, NIIT Technologies, who is also responsible for company’s internal IT infrastructure discussed the relevance and potential of SaaS with Faiz Askari.
‘Software as a service’ becoming a market trend these days, what are your views on it?
The first wave of adoption for software as a service has been under way for several years with Sales automation, CRM and payroll applications as these require little integration with on-premise applications and little customization. Salesforce.com and Web Ex are two examples. However, the next wave of applications seems likely to involve transactions between buyers and suppliers, including procurement, logistics, and supply chain management. As customers grow increasingly comfortable with the concept, a third wave of applications more critical to business. As an example, hosted environments for software development are sure to follow suit.
From a CIO’s standpoint, why software as a service (SaaS) model is pervasive?
There are both technical and business reasons driving the demand for SaaS, primarily, with the rise of the Internet and broadband connectivity, organizations are in the process of moving away from traditional computing models like client/server to more flexible multi-tiered architectures. As bandwidth costs continue to drop, it’s now affordable for companies to purchase the level of connectivity that allows online applications to perform gracefully.
Company’s customers purchasing goods and services are demanding access anytime during the day, which means their IT systems must be available at all times, and to locations anywhere in the world.
How does the entire business ecosystem of any organization support SaaS?
Perhaps most important, many customers are eager for the shift to SaaS, as they’re frustrated by the traditional cycle of buying a software license, paying for a maintenance contract, and then having to go through time-consuming and expensive upgrades. Additionally, SaaS licenses also differ from traditional license plans in that SaaS licenses factor into the operating budget, whereas traditional software license plans (purchase, maintenance and upgrades) usually require a capital budget that increases over time.
Interestingly, company’s suppliers and employees are demanding access to their IT infrastructure on a –real time basis in order to work. These global and ever-present demands require a flexible, robust, and secure application infrastructure that can be too complex and costly for companies to implement and manage on their own.
Which business community gets maximum benefits from SaaS model?
The companies best suited for the SaaS model are the Small to Medium Businesses (SMBs); however, even enterprises see the value of utilizing SaaS for those applications that are used within certain departments or lines of business, because they save the need for a ‘global’ IT deployment of an application that is not used by everyone. By using outsourced SaaS services, companies can procure a computing environment that is less expensive than creating one on their own. This allows organizations to focus on the real technology and business issues that drive the success of their companies.
What are the limitations and challenges of this model? Up to what extent, do you think that security becomes a critical issue for the IT managers, while using SaaS?
Many organizations have legitimate security concerns. End-User organizations must trust that 0n-demand vendors are keeping their data secure by protecting data from internal threats such as limiting access to specific vendor employees. In addition to this, the data have been effectively screened on regular basis, protecting data from external threats such as hackers and reliably backing up, archiving, and when necessary recovering data.
As far as reliability is concerned, SaaS applications are delivered via the Internet and a multi-tenant shared infrastructure, there are many failure points that can create a service outage. Large spikes in usage, denial of service attacks, application upgrades or hardware failure can bring the system down unexpectedly for all end-user organizations.
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