SaaS White Paper - An Overview

SaaS
Software as a Service

An Overview

Software as a Service – An overview

Table of Contents

1. SaaS: IT trend with potential ...................................................................... 2

2. The Benefits of SaaS ................................................................................... 3

2.1. Lower, predictable IT .................................................................................. 3
2.2. Lower IT expenses, more service ................................................................. 3
2.3. High availability and performance ................................................................. 3
2.4. Software that is always current and compatible .............................................. 3
2.5. High employee mobility ............................................................................... 3
2.6. Low barriers to entry .................................................................................. 3

3. Practical example: Web collaboration ........................................................ 4

4. Checklist for the introduction of SaaS ........................................................ 5

5. Important points for companies to consider ............................................... 6
5.1. No Internet - No application ........................................................................ 6
5.2. Security ..................................................................................................... 6
5.3. Adapting to your own requirements ............................................................... 6
5.4. Availability ................................................................................................. 6

6. Conclusion .................................................................................................. 6

Contact ........................................................................................................... 7

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1. SaaS: IT trend with potential
Software as a Service is one of the strongest current
trends in the IT industry. However, SaaS did not
become a buzzword until a few years ago – as a Definition:
way to make software available via the Internet. SaaS is a distribution
model for software in
The pioneer of the concept was and remains CRM
which delivery takes
Provider Salesforce.com, which was able to
successfully take primarily small and medium-sized place via Internet.
companies away from such established competitors as
Siebel and SAP. In addition to the CRM area, SaaS is
today mainly established in the collaboration market.

SaaS offers companies a flexible, cost-effective alternative to running software in-
house: Instead of installing and operating software in their own computing center, they
simply take advantage of a hosted service. Employees of the company can start the
application either through a web-based front-end or by launching a file that
establishes a data-transmission connection.

The provider of the service ensures the availability and security of its solution and
performs all background maintenance and updating tasks. In most cases, the customer
pays monthly fees for use of the software and related services. Some providers offer an
alternative pay-per-use model.

To date, the situation in companies still looks a lot different:
Software is generally purchased and integrated as a
permanent part of the customer's IT landscape. The IT Distribution:
department has to regularly update and maintain the SaaS is currently most
software while providing user support. These additional widespread in the CRM
costs, together with the purchase price of the software, are and collaboration
called the "Total Cost of Ownership" (TCO). In the SaaS
areas.
model, the software provider is responsible for these
additional costs. As a consequence, the reduction of Total
Cost of Ownership is one of the greatest advantages
of SaaS.

During 2008, the SaaS market grew strongly, and this trend is expected to continue.
Although the outlook for the overall IT industry is generally cautious, analysts at IDC are
forecasting SaaS growth of 42% for 2009. According to market research firm Gartner,
global SaaS sales are expected to double by 2012.1

1. IDC: "Worldwide Software as a Service Forecast Update", March 2009
Gartner: "Market Trends: Software as a Service, Worldwide, 2007-2012", September 2008

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2. The Benefits of SaaS
The benefits at a glance
2.1. Lower, predictable IT costs • Low procurement costs
Particularly in the first few years, a major portion
of costs are eliminated for the customer. In • Reduced Total Cost of Ownership
addition to procurement costs, the customer • Lower personnel expense, as
saves normal maintenance expenses plus a
installation and maintenance
tremendous amount of time that would normally
be needed for installation or integration into the costs are unnecessary
existing IT environment. As a result, the • Updates are installed by the
customer frees up extra capital that can be put to
provider
profitable use in other projects.
• Low hardware requirements
2.2. Lower IT expenses, more service • High security against downtime
Purchased software requires higher personnel
expenditures for installation, maintenance, due to distributed servers
updates, and sometimes migration. SaaS • Employees always work with the
solutions, on the other hand, can be used up-to-date version
immediately without any implementation. The
customer's IT personnel are relieved of many • Software is available even while
tasks throughout the lifecycle of software, since traveling
maintenance, updates, patches, and security are
included in the provider's service. The service
provider even takes care of support, so free
resources in the IT department can be used to maximize innovation.

2.3. High availability and performance
Under the SaaS concept, software manufacturers host their product in high-performance
computing centers with a high degree of downtime security. No providers can afford to
annoy their customers with long reaction times or unavailable solutions.

2.4. Software that is always current and compatible
Manufacturers update SaaS solutions directly on their own servers. The customer is not
even aware of the update and incurs no expenses as a result. Users automatically have
the latest version at all times. Costly upgrade projects and problems caused by
incompatible systems are not an issue.

2.5. High employee mobility
Mobility is an important subject for many companies. SaaS solutions are highly flexible
because employees can use them from any computer with Internet access. Typically no
changes to the configuration or the firewall are required for a SaaS solution.

2.6. Low barriers to entry
Due to the low initial costs and the options for pay-per-use and Named User Licenses
(monthly fee per user), SaaS software has a low barrier to entry. This makes it possible
for even small and medium-sized companies to use professional CRM or collaboration
software.

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What were your reasons for introducing SaaS?*

*More than one answer was possible; Source: informationweek.com

3. Practical example: Web collaboration

In addition to CRM, Web collaboration is the market in which SaaS has made the
greatest inroads to date. The reason for this is easy to see: Web collaboration, by
definition, works via the Internet exclusively. Therefore, it is only logical to offer the
application as a whole over this medium.

The high speed of introduction and low entry costs are two of the main reasons why
customers decide in favor of the SaaS model. In the remote support area, the easy user
management also plays a great role, as in the SaaS model, licenses can be exchanged
on the spot without the need to uninstall and reinstall. This is a significant advantage for
the often high fluctuation in support teams.

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4. Checklist for the introduction of SaaS

With the following checklist, you can quickly and easily determine whether SaaS is of
interest for your company or project. Simply answer the questions in the checklist and
add up the numbers for the answers in each column.

SaaS In-house

Is a high initial investment acceptable? No Yes

Is there time pressure for the introduction? Yes No

Are multiple locations affected? Yes No

Do your requirements deviate greatly from the No Yes
standard?

Do you have adequate internal IT resources? No Yes

How high is the planned number of users? More low More high

Does the application have to be usable even Yes No
while travelling?

Are frequent updates of the application Yes No
necessary?

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5. Important points for companies to consider

5.1. No Internet - No application
Of course, the benefit of mobility comes at a cost: An SaaS solution is not available
without Internet access. Fortunately, expansion of the UMTS and HSDPA wireless
standards is making this less and less of an issue.

5.2. Security
Security is the most important aspect of an SaaS solution, due in part to the need to
comply with corporate and compliance directives. Therefore, be absolutely certain to
examine the provider's security concept.

5.3. Adapting to your own requirements
Pay attention to whether the SaaS application can be adapted to your requirements. This
pertains to integration into existing systems via interfaces as well as multiple levels of
access rights and adaptations to your Corporate Identity.

5.4. Availability
Which service levels does the provider guarantee? What does the infrastructure look
like? Here, it is worthwhile to take a look at the provider's reference customers and their
statements.

6. Conclusion

For many companies, SaaS is an attractive alternative or
supplement to having an extensive internal IT infrastructure. Conclusion:
Instead of high procurement costs to purchase software, the SaaS helps to increase
flexibility and decrease
customer normally pays a monthly fee that represents a
costs.
consistent cost for budgeting purposes. This amount includes
not only the cost of using the software itself, but also all
services. The software provider takes care of installation,
updates, maintenance, and support, thereby relieving the
customer's IT department of a great deal of work. As a result, the SaaS solution saves
time and money and allows the company to focus on its core competencies.

Another important benefit is the mobility it gives employees. They can work from the
road just as if sitting at their own desks - assuming they have an Internet connection.
The crux of the matter is security. The software provider must be equally concerned
about security as about the solution's availability and performance. Particularly in
challenging economic times, a SaaS solution can reduce expenses and free up resources
for other activities in comparison to a permanently installed, high-maintenance
application.

6


Contact

With 20 years of consultative solution sales experience related to SaaS, Software

Applications and Managed Services, Bryan McKinley has helped companies large and

small with effective business solutions for improved customer interaction, including

service organizations, transportation, manufacturing, financial, healthcare and for

internal collaboration among field staff and knowledge workers.

F o r m o re i n f o r ma t i o n o r t o s c h e d u l e a c o n s u l t a t i o n p l e a s e co n t a c t :

B ry a n M c K i n l e y
b ry a n @ b ry a n mc k i n l e y . n et

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SaaS White Paper - An Overview

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