The document discusses Software as a Service (SaaS), defining it as software provided over the internet on a subscription basis. It outlines opportunities of SaaS like lower costs, flexibility, and focus on core business. Considerations include integration with existing systems, customization needs, and data security risks from storing information remotely. SaaS adoption is growing, with over 10 million companies expected to use it in the next 5-10 years and more than half of Fortune 500 companies already using it. Major software companies are heavily investing in SaaS.
3. Introduction Definition of SaaS Software-as-a-Service (SaaS) has evolved from limited on-line software delivery of the 1990s to a fully matured “direct-sourcing” business model for enterprise applications SaaS is one of the fastest growing concepts: more than 10 million companies will be using SaaS in the next 5 - 10 years; more than 50% of all Fortune 500 companies are already using SaaS According to influential IT institutes, SaaS is the leading business model of choice for 2008/2009 Virtually all big software/service vendors (IBM, Microsoft, Oracle, Cisco) are investing heavily in SaaS With the continuously increasing bandwidth and reliability of the internet, using web services over the (public) internet has become a viable option Page 3
4. Introduction Definition of SaaS Source: Software On Demand’s Impact on the Software Industry: Transformation, Extinction or Rebirth?; July 2005 Source: U.S. Software On-Demand Delivery Model 2005–2009 Forecast; IDC #33493 June 2005 Page 4
5. Prominent SaaS applications Companies (incl. SMB’s) using or piloting SaaS software applications, HR , messaging, security and supply chain management all top customer relationship management (CRM) in adoption. Last year, respondents were much more likely to adopt SaaS for ERP (31%) and CRM (27%): CRM has in fact grown by 11% while ERP remained static. Note*: Sample size: 42, Respondents’ profile: Software decision makers at companies of all sizes that are currently piloting or using SaaS, Geography: Europe Source 1: Forrester The State Of Enterprise Software Adoption In Europe Jan 2006 Page 5
6. Drivers for SaaS Adoption ISVs End Users Technology & connectivity makes it possible Recurring revenue stream Single version for all customers Strong customer feedback loop Easier to trial Reach broader target market Pricing matches economic benefits Reduced initial outlay; complexity and risk Reducing IT Operations cost Shift Capex to Opex Easier to trial Focus on core business Page 6
7. Opportunities of SaaS Software provided as a service by a software vendor to multiple customers with the following main characteristics: Standardization of software – eventually customized for specific customers and markets – License based on usage (subscription or “pay-as-you- go”) Service including maintenance, support and upgrades – Data storage at the SaaS vendor Web based – usage over the (public) internet Page 7
8. Opportunities of SaaS SaaS offers potential for lowering the Total Cost of Ownership Lower operational costs No large scale, costly, high risk implementations of applications Fewer operational resources for application management No platform and hardware (maintenance) costs for application servers Reduced operational complexity: software delivered as a transparent service through the web Minimized software development costs – No lengthy software development and testing cycles Lower costs for software use No software license and annual maintenance fees No expensive software upgrades Lower application consultancy and support costs Page 8
9. SaaS allows corporations to focus on core business activities and responsibilities Transparent overview and usage of electronic data and information Automation of iterative, manual tasks Faster Time to Market – easy to scale software More flexibility in changing and modifying application services for business needs – Full-scale integration of business processes Control over IT Minimized IT Service Management efforts mainly focused on availability – Well-defined SLAs between the corporation and the IT vendor More predictable cash flow – easier licensing based on access/usage of software Increased productivity and improved user satisfaction – Shorter implementation times for IT services and changes – Single point of entrance to business applications provided via the web – Automatic software upgrades with minimal outage Page 9 Opportunities of SaaS
10. Considerations of SaaS Depreciation of existing software and software servers Integration/alignment of existing Service Management processes and the processes of the SaaS vendor(s) Single or multi-vendor solutions Standardized or customized services Several pricing models possible Identity & Access Management The rate of “outsourcing” Logging and monitoring Data confidentiality/integrity By using SaaS, the business (critical) data is stored at remote location. It may well lead to extreme dependency on vendor’s integrity and expertise Page 10
11. Security and Privacy Ability to Customize Visibility and Control Data accessibility Global reach Ease of provisioning Business agility Manageability The Industry Debate Page 11
12. On-premise Hosted Email Collab HR CRM ERP SCM Financial BI The Industry Debate SaaS vs. S+S Page 12
13. The Move Is On Microsoft Online Suite Apple iTunes, iPhone SDK Adobe AIR Quicken Online Desktop Software IBM Blue Cloud, Lotus Bluehouse SAP Business ByDesign Siebel CRM OnDemand Sun Hydrazine Enterprise Software Google Gears, Earth, Picasa Yahoo! IM, Konfabulator widgets eBay Turbo Lister, Outlook AddIn Consumer Web Phase 2 Salesforce.com NetSuite Office Zoho CRM Pure-Play SaaS Page 13
