Quality is delighting customers
Costs can be sort of a double-edged sword. On the one hand, costs for accessing the software can be an ongoing thing. Rather than pay for it once and be done with it, the more you use it, the more you’ll be billed. On the other hand, in some cases you don’t have to pay as much up front and you are only billed based on your use of the application.
For vendors, SaaS has the appeal of providing stronger protection of their intellectual property as well as creating a continuous stream of income.
There are many types of software that lend themselves to the SaaS model. Typically, software that performs a simple task without much need to interact with other systems makes them ideal candidates for SaaS. Customers who are not inclined to perform software development but have need of high-powered applications can also benefit from SaaS. Some of these applications include
Customer resource management (CRM)
IT service management
Web content management
SaaS applications differ from earlier distributed computing solutions in that SaaS was developed specifically to use web tools, like the browser. This makes them web-native. It was also built with a multitenant back end in mind, which enables multiple customers to use an application.
SaaS provides network-based access to commercially available software. Since the software is managed at a central location, customers can access their applications wherever they have web access.
As we’ll discuss in the next section—PaaS—SaaS is often used in conjunction with other software. When used as a component of another application, this is known as a mashup or a plugin.
One of the biggest benefits of SaaS is, of course, costing less money than buying the application outright. The service provider can offer cheaper, more reliable applications than organizations can by themselves. Some other benefits include the following:
Familiarity with the World Wide Web Most workers have access to a computer and know how to use it on the World Wide Web. As such, the learning curve for using external applications can be much smaller.
Smaller staff IT systems require the overhead of salaries, benefits, insurance, and building space. The ability to farm out applications reduces the need for as much IT staff.
Customization Older applications were difficult to customize and required tinkering with the code. SaaS applications are much easier to customize and can give an organization exactly what they want.
Better marketing A provider who had developed an application for a very narrow market might have had problems marketing that application. However, with SaaS, the entire world is open to the providers.
Web reliability We talked earlier about how the World Wide Web can be seen as a source of failure. And while that is sporadically true, the fact of the matter is that the Web is generally quite reliable.
Security Secure Sockets Layer (SSL) is widely used and trusted. This allows customers to reach their applications securely without having to employ complex back-end configurations, like virtual private networks (VPNs).
More bandwidth Bandwidth has increased greatly in recent months and quality of service improvements are helping data flow. This will allow organizations to trust that they can access their applications with low latencies and good speeds.
Like anything, SaaS faces obstacles to its implementation and use. The first is that an organization that has a very specific computational need might not be able to find the application available through SaaS. In that case, they may discover that they need to buy the software and install it on their local machines. That said, companies with unique needs may be able to find some of the components in a SaaS.
There is also an element of “lock-in” with vendors. That is, the customer might pay a provider to use an application, but once they do, they may be unable to port that application to a new vendor. Or, it might be possible to move to a new vendor, but the old vendor might charge a hefty moving fee.
Finally, SaaS also faces challenges from the availability of opensource applications and cheaper hardware. If companies are so inclined, they can put their open source applications on hardware that performs better and costs less than it used to.