1. TITLE PAGE
1.0 EXECUTIVE SUMMARY
2.0 INTRODUCTION
3.0 EVOLUTION OF SaaS
4.0 ADOPTION OF SaaS
5.0 HOW SaaS WORKS
5.1 Ranges of SaaS
5.2.1 CRM SaaS
5.2.2 ERP SaaS
5.2.3 HRM SaaS
5.2.4 Supply Chain SaaS
5.2 Two Categories of SaaS
6.0 BENEFIT OF SaaS TO ORGANISATIONS
6.1 USER SATISFACTION/REACTIONS
7.0 PROBLEMS ASSOCIATED WITH SaaS
8.0 CONCLUSION
9.0 RECOMMENDATION
10.0 REFERENCES
11.0 BIBLIOGRAPHIES
12.0 APPENDICES

2. 1.0 EXECUTIVE SUMMARY
The issue of whether SaaS is truly a core disruptive technology and business
services phenomenon is no longer in doubt. SaaS is now a fundamental fact of life in IT and
in business. Already, SaaS has moved from simple to sophisticated – and from a
departmental adjunct, to becoming a basic part of business and IT infrastructure & operations.
SOA, Open source, collaboration, mobility and mash-ups and Web 2.0 are now converging on
SaaS platforms providing rich, configurable application and business value.
While the pace of growth and change has been fast, longer-term success with SaaS
will require that both users and vendor rethink how business software deployment strategies
and architectures will evolve so as to fully understand the impacts of this new delivery and
licensing approach.
This report will however provide a comprehensive look at the state of the SaaS
industry and user adoption as well as valuable insights relative to the realities of SaaS today,
and where it is going tomorrow. It is notably that SaaS has moved beyond the tipping point
from standalone, cost-driven software functionality to sophisticated, integrative, business-
process-driven platforms services and accelerating into mainstream adoption. Nonetheless
there is a breakthrough levels of SaaS acceptance for mission-critical computing which can
be seen from SMBS to the largest enterprises worldwide. The second wave of SaaS as a
next generation business platform delivering business advantages.
Other key findings and conclusion from this report include – managing and reducing
software costs remain important attractions for SaaS, but users have shifted their key SaaS
decision criteria to service levels, intra- and inter-company collaboration and integration with
data workflow.
The increasing presence of “cloud-based” SaaS business solutions that must be
integrated with on-premises applications will require SaaS Integration Platforms (SIPs) and
Enterprise Service Busses (ESBs) to form coherent and flexible IT portfolios of integrated
business. Hybrid application architectures are emerging – SaaS is increasingly linked to on-
premise data, applications and processes through web services-based integration APIs.
However it is, SaaS represent a fundamental shift in how software is acquired,
implemented, used and paid for. Already considered as an established alternative model in
the US, SaaS is starting slowly to be recognized as an interesting model in Europe. SaaS is
not just hype and most internet users have actually already used SaaS without being aware of
it.
The SaaS Model provides a lower cost of ownership as compared to the conventional
premise enterprise software delivery model. Moreover the global economic slowdown has
created an opportunity for the growth of SaaS. The credit crunch enterprises and small &
medium companies is opting SaaS model as a cost effective alternative by making instalment
based payment.
2.0 INTRODUCTION
Software as a service is the term used to describe a model of software deployment
where an application is hosted as a service and provided to customers across the internet,
either through a time subscription or a “pay-as-you-go” model. Also known as “software on
demand”, the SaaS model allows vendors to develop, host and operate software for customer
use. Rather than purchase the hardware and software to run an application, customers need
only a computer or a server to download the application and internet access to run the
software. The software can be licensed for a single user or for a group of users. (Torbacki
2008)
SaaS software vendors may host the application on their own web servers or upload
the application to the consumer device, disabling it after use or after the on-demand contract
expires. Whilst SaaS was widely deployed initially for sale-force automation and Customer
Relations Management (CRM). Its use has become commonplace by businesses for tasks
such as computerized billing, invoicing, human resource management, service desk
management, and sales pipeline management, among others, according to January 2010
Information Week article.
More so, an article called “Strategic Backgrounder: Software as a Service”, was
claimed by the author to be internally published in February 2001 by the Software &
Information Industry’s (SIIA), e Business Division, Loud cloud, founded in 1999 by Marc
Andreessen, was one of the first to attempt to commercialize software as a service computing
with an infrastructure as a service model. The technology also was called “ASPs” or

3. Application Service Providers, under the terminology of the day. According to Wired
Magazine, Loud cloud was one of the first vendors to talk about cloud computing and SaaS.
Loud cloud changed its name to Opsware after selling the operations side of the business to
EDS in 2002, and HP acquired Opsware in 2007 and EDS in 2008. HP now offers the SaaS
originally developed by Loudcloud as HP software-as-a-service. (Arussy 2005)
According to a leading research firm, the SaaS market reached $6.3B in 2006, while
revenue were $8B in 2009 worldwide growth of 22% over 2008; still a small fracture of the
over $300B licensed software industry. However, the growth in SaaS since 2000 has
average 26% CAGR, while licensed software growth has remained relatively flat. Demand for
SaaS is being driven by real business needs – namely its ability to drive down IT-related
costs, decrease deployment times and foster innovation. (Gartner 2008)
By 2013 revenue will grow to $16 billion. Gartner estimates that SaaS revenue only
comprises 3% of the total enterprise software sales which seems too low based on subjective
factors, such as an amount of innovation flowing from SaaS, willingness of professional
investors to fund SaaS companies and worldwide customers of all size accepting the SaaS
delivery model. According to an IDC (International Data Corporation) poll of 100 CIOs (Chief
Information Officers) from 500 companies in June 2008: 73% of large companies have
adopted or plan to adopt SaaS solutions in the next 18 months” (Gartner 2008)
Of the worldwide SaaS market of $8billion, the US plus the next 14 markets accounts
for 93% of this total. US market alone is 40% the worldwide total or approximately $3.2billion,
which implies SaaS sales outside US of approximately $4.8billion. Top market outside US
are Japan, Germany, the UK, then France, followed by the European regions of Scandinavia
and Benelux, then Australia/New Zealand. The size of the top 14 SaaS markets outside the
US range from Japan at approximately $850million, followed by Germany and the UK at
approximately $6.0 million each, down to Southeast Asia and South Korea, which are slightly
over $100 million each. (Market commentary 2008)
3.0 EVOLUTION OF SaaS
Software as a Service (SaaS) is top of mind for many leading software executives. It
is often approached to talk about the current state and evolution of SaaS as if it is a new
capability and delivery model for software companies. The reality is that SaaS is already
evolving into the 3rd
generation (SaaS 3.0) (Crimson Consulting 2010).
3.1 SaaS 1.0: Hosted/ASP-based Applications – The first generation of SaaS
witnessed the meteoric use and catastrophic demise of the ASP (Application Service
Provider) market. The early hosting/ASP models were based on the APS purchasing a
restricted use perpetual license from the software vendor and then providing subscription-
based offerings to their end customers. ASPs offered primarily packaged applications
targeted at SMB market.
This model was initially client/server and provided the post-deployment ability to
customize and integrate. Example of vendors include: Corio, USi. The distribution model
employed direct sales with “feet on the street”. Key drivers are – lower initial costs; faster
deployment; lack of IT infrastructure and; modest customisation and integration requirements;
re-usable customisation. (Crimson Consulting 2010).
3.2 SaaS 2.0: “Pure” SaaS Application – SaaS 2.0 is reaching a stage of maturity.
This version of SaaS offers a complete range of functional and departmental applications
such as CRM, ERP, Financials, HR etc. The applications are mostly developed for SaaS
(“ground up”/web native). These apps typically have a shared code base and one-to-many
delivery model. (Crimson Consulting 2010).
The pricing is driven by a lower cost subscription, which includes support, rapid
deployment, and easy-to-use functionality. Thus this SaaS model creates economies of scale
for software vendors and also enables rapid growth. Consider sales force.com YOY revenue
growth from $176M (FY05) to $310M (FY06) and Forward P/E (1yr) ratio of 93.10 (Oct 31
2006). Example of vendors include: salesforce.com (today); Plexus; Netsuite; WebEx. The
distribution models are – low cost direct sales model aided by “inside sales” and web-based
sales. The key drivers for SaaS 2.0 includes – lower initial cost; faster deployment; greatly
reduced reliance on IT in purchase process; limited customisation and integration requirement
(mostly business user); increased usability & user adoption. (Crimson Consulting 2010).

4. 3.3 SaaS 3.0: Hybrid SaaS Application – SaaS 20 focus on the small and med-sized
business markets. SaaS 3.0 is emerging with the adoption by enterprise clients of the SaaS
capability. Consequently, these larger companies are demanding and evolution from the pure
play SaaS model to meet their need to globally scale the SaaS solution to meet their specific
corporate needs. With the entrant of the Enterprise Customer, there has been an increase in
demands for customisation, thus the rise of the seemingly contradictory hybrid pure – play
and hosted SaaS model. (Crimson Consulting 2010).
However, bigger customers are requiring integration with on premise applications,
flexible delivery models, based on customer needs that are driving an evolution of target
applications. Today, these services are mostly developed for SaaS (“ground up”/native). The
pricing model is also evolving to include a flexible
subscription/licensing hybrid. Example of vendors include: salesforce.com (soon); Right
Now; SAP (my SAP CRM). The distribution models are – discontinuity, complex ecosystem
of ISVs; consultancies and partnerships emerging. The key drivers for SaaS 3.0 are basically
faster deployment with ability to bring on premise; extended customisation and integration
requirements (business user & IT); increased usability & functionality to complete with majors
(SAP, Oracle, Siebel) & accelerate user adoption across verticals. (Crimson Consulting
2010). (Appendix I, II, V)
4.0 ADOPTION OF SaaS
In recent year, traditional software license purchases have begun to seem
antiquated, as many vendors and customers have migrated to software as a service business
model. It is important to note that SaaS typically encapsulates enterprise as opposed to
consumer-oriented web-hosted software, which is generally known as Web 2.0. (Dan
2007).However, the software market has matured from its days of double-digit growth back in
an era of the internet bubble to presently growing in the mid-to high single digits. This general
industry maturing, the trend of outstanding, as well as the migration of security and
operational control risk, have contributed to the accelerated adoption of SaaS delivery
models. According to Gartner Survey in July 2009, it was found that customer are “somewhat
satisfied” with the dramatic growth of SaaS adoptions. Also, several important changes to the
way people work have made this rapid acceptance possible. (Dan2007).
IT Outsourcing Trend – The traditional rationale for outsourcing of IT systems involves
applying economies of scale to the operation of applications, such that a service provider can
offer better, cheaper, more reliable applications than companies can themselves. Since SaaS
is a version of BPO (Business Process Outsourcing), it delivers software functionality without
the overhead of operating the application. (Nascio 2008).Outsourcing has become an
increasingly important enterprise strategy, given that the IT outsourcing industry has grown at
an average rate of 7.3% CAGR since 2003. Whether offshore or onshore, if companies are
comfortable outsourcing key business functions and processes, then why not the operation of
their software applications as well. (Nascio 2008)
Corporate Consumer – The hyper-growth of the past, driven by cutting edge applications and
the scarcity of solutions to improve productivity, seems to be largely behind us. Today,
corporate buyers often have the ability to choose among a myriad of comparable software
solutions – including lower SaaS solutions. SaaS not only alleviates the costs of traditional
perpetual licensing fees but also eliminates the need for additional IT infrastructure
investments to support new applications. In addition to fewer up-front costs, SaaS is often
easier to discontinue or substitute, reducing switching costs. (Market Commentary 2008)
According to a recent study from the Software & Information Industry Association (SIIA),
whilst comparing traditional CRM software packages, found that the TCO (Total Cost of
Ownership) of the saleforce.com CRM SaaS offering was 10-20% of the TCO of traditional
CRM. The consensus seems to be that SaaS could lead to potential weaker bargaining
position for sellers of the traditional software products, and a stronger position for SaaS
solution providers.(Saugatuck 2006)
Migration of Security and Operational Risk – SaaS has long been considered a potential
security and operational risk because it often requires that proprietary company data be
transported outside of the confines of the internal network. However, the recent availability of

5. better remote security technologies and data redundancy tools, together with the five nines
availability of many SaaS vendors may prove SaaS to be less risky. (William 2010)
Data Aggregation – Instead of collecting data from multiple data sources, with potentially
different database schemes, all data for all customers is stored in a single database scheme
(i.e. multi-tenant). Thus, running queries across customers, mining data, and looking for
trends is much simpler. (William 2010)
Availability of enablement technology – According to IDC, organisations developing
enablement technology that allow other vendor to quickly build SaaS applications has played
an important role in driving the adoption of SaaS. 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. According to Saugatuck study, it is evidently
showed that the industry will mostly likely converge to three or four enablers that will act as
SaaS Integration Platforms (SIPs). (Saugatuck 2006)
5.0 HOW SaaS WORKS
Anytime/Anywhere Access. With SaaS, the administrators have every HR function
organised into one application, accessible anytime, 24/7, from anywhere there is an internet
connection office, home or on the road. But the efficiency, convenience and benefits of SaaS
delivered Ulti Pro extend beyond the HR department. (Zimmerman 2009)
Managers and employees – any designer user – can access the self service features
of Ulti Pro. Tasks once administered by an HR team, like updating employee information,
logging paid time off, changing benefit data, reviewing compensation or performance review
history, or running reports and analytic, are self-administrated through SaaS. Managers and
employees can access Ulti Pro with the same around-the-clock convenience. They gain
greater control, and HR staff recover hundreds of hours once spent updating and inputting
information and answering employee and manager enquiries. Licensed software resides on a
company’s in-house server and requires in-house hardware, maintenance, and support.
(Zimmerman 2009)
With SaaS, Ultimate software houses the technology and applications in its secure,
hardened data centre and provide 24/7 service, support, maintenance, upgrades and safe
data storage. There’s no large, upfront capital expenditure and companies lacking technical
infrastructure or investment dollars can get the same leading-edge technology and HR
management tools as larger firms. It is the most business value at the most affordable price.
With two hardened, secure SAS 70 – complaint facilities – an FEMA class L-rated
facility, built to withstand fires, natural disasters, power outages, sabotage and theft, and a
center with 24/7 security and N+I redundancy and critical system – SaaS customers benefit
from advanced disaster protection and recovery. (See Appendix ) .SaaS offers opportunity to
transform IT departments from support staff to business partners and strategists by shifting
their attention from mundane technical tasks to issues and opportunities for more strategic to
the business. (Zimmerman 2009). (See Appendix VI)
Ranges of SaaS offers
According to CIO (Chief Information Officer) insight, the top 15 on demand
business application system of SaaS includes
• Customer Relationship Management
• Human Resource Management
• Billing and Accounts Payable
• Collaboration Software
• E-Commerce
• Corporate Portals
• E-mail and Instant Messaging
• Business Process Management & Workflow Software
• Blogs, Wikis and Social Media or Web 2.0 Software
• Business Intelligence (BI), Analytics and Data Mining
• Database Systems
• Enterprise Resource Planning (ERP) System

6. • Content & Information Lifecycle Management
• Customer Self Service
• Supply Chain Management, Distribution and Logistic Software
Others Ranges of SaaS
• Web mail & web conferencing
• Payroll system
• Sale force automation
• Expense reporting
CRM SaaS---This is a broadly recognized, widely-implemented strategy for managing and
nurturing a company’s interactions with clients and sales prospects. It involves using
technology to organise, automate, and synchronize businesses – principally sales activities,
but also those for marketing, customer service and technical support. The overall goals are to
find, attract and win new clients, nurture and retain those the company already has, entice
former clients back into the fold, and reduce the costs of marketing and client service.
(Wainewright 2007)
Once simply a label for a category of software tools, today, it generally denotes a
company-wide business strategy embracing all client-facing departments and even beyond.
When an implementation is effective, people, processes and technology work in synergy to
increase profitability and reduce operational costs (saleforce.com 2005).
HRM SaaS----The HR function is responsible for attracting, developing and maintaining the
firm’s workforce. HRM SaaS support activities such as identifying potential employees,
maintaining complete records on existing employees, and creating programs to develop
employee’s talents and skills. (Lau don 2003)
HRM system help senior management identify the manpower requirements (skills,
educational level, types of positions, number of positions and cost) for meeting the firm’s long
term business plans. Middle management use HRM systems to monitor and analyse the
recruitment, allocation and compensation of employees. Operational management uses HRM
system to track the recruitment and placement of the firm’s employees. (Lau don 2003)
ERP SaaS -----This help an organisation in problem solving by collecting data form key
business processes in manufacturing and production, finance and accounting, sales and
marketing and human resources and storing the data in a single central data repository. This
makes it possible for information that was previously fragmented in different systems to be
shared across the firm and for different parts of the business to work more closely together.
(Torbacki 2008)
Enterprise system speed communication of information throughout the company,
making it easier for business to co-ordinate their daily operations. Thus, give companies the
flexibility to respond rapidly to customer requests while producing stocking inventory only with
what is needed to fulfil existing orders. (Oracle 2005; Sullivan 2005).
SCM SaaS-----This helps companies manage relationship with their supplies. These system
provide information to help suppliers, purchasing firms, distributors, and logistics companies
share information about orders, production, inventory level and delivery of products and
services so that they can source, produce, and deliver goods and services efficiently. The
ultimate objective is to get the right amount of products from their source to their point of
consumption with the least amount of time and with the lowest cost. (Laudon 2003
TWO MAIN CATEGORIES OF SaaS
A simple and concrete example of SaaS is the “free” mail (also called web based
email) systems offered on the internet such as Microsoft Hotmail, Gmail and Yahoo Mail.
Each program meets the basic criteria of an SaaS application: a vendor (Microsoft, Google or
Yahoo) hosts all of the programs, logic and data in a central location and provides end users

7. access to this data and the software which is run and used over the world-wide web. (Biddick
2010)
Thus, SaaS is often divided into two major categories:
• The so-called “line of business services” which refers to business solutions offered to
companies and enterprises, and sold or made available to those enterprises on a
subscription basis. Applications covered under this category include business
processes such as supply-chain management programs, customer relations
applications and others. (Sinclair 2007)
• Customer-oriented services which are offered to the general public either on a
subscription basis or (more often than not) offered for fee but are supported by
advertising. Web-based e-mail services such as those stated above fall into this
general category. (Sinclair 2007)
6.0 BENEFIT OF SaaS TO ORGANISATIONS
Right to data usage analysis - One of the greatest advantages of SaaS deployment model for
an organisation is the ability to see data (anonymously) across multiple customers.
Support expectations – A key benefit of SaaS is that organisation can offload application help
desk and support to their SaaS vendor.
Gross Platform Compatibility – One of the touted benefits of SaaS application in this respect,
is that they are fully functional in the diverse technology environment that might exist for a
given vendors, customer or travelling employees
Upgrades – This is one of the main benefit of SaaS, in that, the organisation have an ongoing
access to innovation and new features, as opposed to the sporadic method of “new versions”
for on premise software. There is automatic updates and patch management. With SaaS the
vendor will normally manage the upgrade process for the organisation.
It removes much of IT cost for an organisation. This means no client/server software
installation or maintenance. That is to say, no more 800 page planning and implementation
guides.
It gives an organisation the flexibility to change usage commitments as business
circumstances change.
It reduces the risk involved in acquiring new software. Buying software is a risk – it may not
work as expected, adoption may be poor. With most SaaS software the minimum
commitment is normally a year. If it doesn’t work an organisation invested a lot less then with
an upfront purchase.
Shorter deployment time – potentially minutes as opposed to a phased implementation that
could take a month.
Redistribute IT budget – By outsourcing software functionality to a provider, the enterprise or
an organisation realized a cost savings in infrastructure requirements and IT personnel
knowledge requirements. This allows the enterprise to focus on core competencies. It
means that the cost savings from using SaaS applications can be flat out saved, or
reallocated to boost productivity through other services.
It allows an organisation to influence product and service quality via ongoing relationship with
the vendor.
Global Accessibility – There is an affordable access to current or newest business
technologies and tier-one business application. Thus, allowing continuous access to the
newest software version compatible with actual law regulation.

8. No upfront spend – SaaS Software is typically subscription based so no upfront costs. The
company do not have to pay a single (usually large) licensing fee for the software they use,
install, upgrade or fix. The company only needs to pay recurring subscription fee (know as
annuity payment). Thus, reduce overall cost of ownership.
Small shortage requirement – The company need not store software or data stored on his
computer so he doesn’t need large data storage facilities. There is also the convenience of
not needing to constantly backup data; storage is the responsibility of the SaaS provider.
Fewer personnel – SaaS reduces the need for specially trained IT personnel to handle
maintenance, monitoring and software updates.
Meeting short term solution needs – Often times, business units within a company have
interim solution needs of such short term endeavours cannot be easily met by the IT
department or even focused on due to other priorities. SaaS provide an easy and flexible
alternative to meeting short term solution needs as SaaS offering can be easily acquired,
used and terminate when no longer needed.
(Adapted from Global SaaS Market Report 2009). (See Appendix III)
6.1 USER SATISFACTIONS/REACTIONS
Gartner’s 2008 survey of 333 enterprises in the US and UK found a low level of
approval from customers, describing overall satisfaction levels as “lukewarm”. Respondents
who had decided against SaaS cited high cost of service, difficulty with integration, and
technical requirements. A recent report from Forrester, “The ROI of software-as-a-service”
examined a range of companies that chose SaaS solutions and found that SaaS does in fact
result in long-term value. (Forrester 2008; Gartner 2008)
In previous years, SaaS adoption in SMBs has been impeded more by perceptions
than anything else. Decision makers question the wisdom of placing their critical business
data and applications on third party vendor server s- deployed over the public network of the
internet. A 2008 Q4 study conducted by Forrester found the main reasons that hold back
customers from opting for SaaS software.
Most of these concern or reactions from the customers are very valid, but they are by
no means universally applicable, as the model has itself been proved to be robust enough to
handle business applications. According to 2007 Gartner study, 45% of US SMBS said they
wouldn’t trust their data to SaaS vendors. What a different two years makes. (Gartner
2008).A Q4 research by Gartner shows that those who adopted SaaS solutions were certainly
not disappointed, as 90% were happy with their SaaS deployments. The idea has certainly
changed over the years. Customer experience with pioneering SaaS companies like Sale
force, Net Suite and hyper office has demonstrated the benefits of the SaaS approach and
change market perceptions.(Gartner 2009). (See Appendix IV)
7.0 PROBLEMS ASSOCIATED WITH SaaS
• Many SaaS applications do not have a Service-Level-Agreement (SLA) that outlines
expectations for applications uptime. And those that do often have a fairly weak uptime
guarantee such as 99.5% uptime outside of planned maintenance windows. (Gallier &
Leidner 2003)
• The ability of any provider’s SaaS to guarantee assurance is paramount. Therefore
the critical problem inherent to a web-based solution remains integrity and security. The
dichotomy is that compliance with ISO 27001 is seen by client IT security as a minimum
level of security assurance, whereas the ability of attackers to outwit and compromise
standards is notorious, since moving critical business data “outside the walls” introduces
a risk of data loss or inadvertent exposure of sensitive information. (Global SaaS Market
Report 2009)
• Sometimes, the decision to adopt SaaS can be short-circuited by resistance from an
organisation, if important people insist that certain functionality remain internal under the
control of IT: other considerations therefore become unimportant. (Global SaaS Market
Report 2008)

9. • SaaS applications typically provide some flexibility for an organisation configuration,
but this approach has its limitation. If an important application requires specialized
technical knowledge to operate and support, or requires customization that a SaaS
vendor cannot offer, it might not be possible to pursue a SaaS solution for the application.
(Gartner 2008)
• Some industries are subject to regulatory law in different parts of the world, which
imposes various reporting and record keeping requirement that the potential SaaS
solution candidate cannot or might not satisfy. (Gallier & Leidner 2003)
• Richard Stall man strongly criticizes SaaS. According to Stall man, using SaaS can
cause as much harm as proprietary software, since the users can’t modify the particular
software that they are using, thus they can’t control their own computing. (www.wiki.com
2010)
• However, there are certain issue hampering the uptake of SaaS applications, the
foremost of which is the problem of integrating SaaS applications with other on-premises
applications, which in turn, leads to interoperability issues. (Global SaaS Report2003)
• Security is also a major concern. As SaaS applications are widely available via the
internet, the chances of misuse are magnified compared to traditional software. This is
one of the reasons that still cause some SMBS to avoid SaaS despite the many cost
benefit its provides. (www.whatis.com 2009)
• Moreover, analyst caution that enterprises do not get lured by the much advertised
low-cost SaaS applications because after the end of the subscription period, enterprises
are most likely to face an increase in their budget.(Gartner 2009)
• Analyst also point to the fact that using software from a hosted service provider does
not in any way mean that the enterprises are relieved of their responsibilities completely
because they have to take care that the quality of services is in place. (Saugatuck 2006)
• Another problem why many a times SaaS is unable to met the requirements of
enterprises is because generally hype is created around SaaS due to which enterprises
tend to expect a lot from SaaS applications and ultimately they get disillusioned.
(Saugatuck 2006)
• The problem with SaaS – as to do with lack of long term flexibility. According to a
research survey, it was evident that not everyone is a fan of SaaS, since some brands felt
that being tied to SaaS meant they were at the mercy of the vendor when it came to the
software architecture. When a vendor would upgrade a version, some brands were
forced to accept the changes. In some cases, some brands were not aware/prepared for
some upcoming upgrades to the SaaS software and were blindsided to the changes.
(Wainewright 2007)
• Furthermore, there is a problem in that some brands felt that larger customers who
wanted specific feature upgrades were able to influence the vendor through direct
pressure or even fuelling the R&D work through feature requests. What’s wrong with
that? A lot, if the feature requires of the larger customer don’t reflect the needs of a small
SMB customer. Since the software is deliver over the web, there was little recourse for
the smaller brand to deny the changes, they pretty much had to suck it up.
• There is a wide fear that organisations without clear objectives and defined business
processes will be no better off with a SaaS solution than an on-premise solution.
(Wainewright 2007)
8.0 CONCLUSION
As firms looks to focus on core business process, software-as-a-service (SaaS)
provides an increasingly attractive alternative. The demand for SaaS applications has risen in
all business categories, from large enterprises to small. This has made SaaS to be one of the
most talked-about topic since the early 2000s. SaaS is therefore, not a new concept. The
code-base, delivering platforms, tenancy options, pricing structures, deployment models, and
business economies have been evolving for a well over a decade. There are a wide range of
business models from the SaaS 1.0 the hosted/ASP application delivery on one end to SaaS
2.0 “Pure” SaaS applications and now the emerging SaaS 3.0 hybrid application model. The
key drivers for adoption of SaaS are still its low-cost and ease of deployment and use. There
are various applications such as service oriented architecture SOA and other web services
which curtail the cost of enterprises because the usage of the software is metered and the
enterprises pay accordingly.

10. The acceptance and uptake of SaaS applications have increased in almost all
geographical regions. Currently, the US is the largest SaaS market in the world, followed by
Europe, and Asia-Pacific. Apart from the regular SaaS applications such as CRM, HRM and
web conferencing, there are certain other newer segments where the SaaS model is
gradually acceptance. However Analysts opinion that in Europe, the uptake of SaaS in the
insurance market will increase in coming years. The early adopters will obviously be the
small rather than large insurers; more so, banks are also likely to adopt SaaS. The European
insurance market as a whole will adopt SaaS as a trusted model in coming years. Another
segment that is also at a nascent stage is security technologies delivered via SaaS. Thus,
the adopters of this segment will been seen being given several offerings in order to make
use of this upcoming technology for their IT systems defense infrastructure.
9.0 RECOMMENDATIONS
• To be successful, a SaaS must deliver what the organisation or individual
want, when they want it,
critical components include application flow, the ease with which important features can
be found and
used, the learning curve for a new user to get up to speed, the long term flexibility of the
application
interface, performance and the aesthetics and responsiveness of the interface.
• The user interface demands for software as a service (SaaS) are very distinct from
on-premise applications and other software models. A key to profitability is to develop a
user experience that adapts to the customer’s environment without customized
development and that scales without adding staff.
• Backup and recovery guarantees. Sourcing executives should help SaaS buyers
understand how their SaaS vendor are approaching backup and data recovery as well as
to write language into the contract that commits the vendor to restore data in case of
disaster. Key components to be considered include the amount of time the application
could be down and the window of potential data loss. Firms should, however be
compensated if the vendor cannot meet its commitment.
• Uptime and performance expectations – sourcing executives should not only push for
uptime guarantees and details in SLAs (Service Level Agreement), but increasingly have
the opportunity to detail performance expectations as well. Although the SaaS provider
can’t control the internet, it may be willing to guarantee a response time for data leaving
its own site.
• Migration strategies. At some point, an organisation might want to migrate away
from a SaaS application to another solution, so it important that an organisation are able
to take their existing data out of the application and move it to another one. Thus, it is
better for an organisation to ask their prospective SaaS provider about any data –
migration strategies and procedures it uses, including any provisions for data and code
escrow.
• In house integration requirements. It is however, imperative for an organisation to
ensure that migrating to SaaS will meet any functional and data-integration requirements
the organisation has in place.
• Expectations for the physical infrastructure/hosting provider. As SaaS continues its
fast-paced growth, some providers will start with one hosting partner and switch to
another one as their needs change. At a minimum, organisations should demand
advance notification and explanation when the vendor is switching the underlying hosting
provider.
• Reporting service. Because SaaS involves giving up direct control of some of your
data, accurate and useful reporting is especially important. Organisation should
determine what reporting services the provider offers, and whether they are compatible
with their business-intelligence requirements.
• Data security standard. Organisation should assess their data-security needs, and
ensure that the SaaS vendor has measures in place to meet the standards sets. The
following things are important for a security point of view:
o Encrypted data. 128-bit encryption is an industry standard
o Physical security measures like facilities, surveillance, guards, fire fighting
preparedness etc

11. o Disaster management arrangements
o Security records
• Tenure – when there is a boom, everyone jumps on the bandwagon, and when it
goes, companies fall like a pack of cards. SaaS is undoubtedly the new frontier of IT start
up wannabeism. An organisation needs to be looking at companies with staying power,
not fair weather start-ups. Tenure means the company has robust enough solutions for
customers to keep coming back month after month; year after year.
• Permission and password protection – since the SaaS application will be accessed
inside company premises, outside the company or even the country by multiple
employees, partners or customers. The solution should include a robust password
protection and permission system. Some elements are as follows:
o Password protection and permissions should be easily to administer
o Permissions should be assignable at different levels of the solution –
workgroup/folder/subfolder
o Different levels of permission should be assignable – read/write/delete
o The system should capture event logs of who logged in when, what
information they accessed and what changes they made.
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