When someone explains Software as a Service or Cloud Computing to you – do you have one of those moments where you hear the words, but can’t make sense of what they are saying? Here is an analogy that virtually everyone can understand.
We all understand the cost of buying and maintaining a car. Today, people can either buy or lease a car. In both cases, some repairs are covered under warranty or included in the lease, but there are still costs involved to operate and maintain it. Not to mention the hassle of selling or trading the car in when you need a new one. What if a third option were available – Car as a Service?
In this model, you would pay a flat monthly fee to use the car. All maintenance, repairs, and even upgrades are included. Fuel, oil changes, standard maintenance, unexpected maintenance, body shop work, etc. are all included in the monthly fee. To top it off, when the manufacturer comes out with a time tested new model, your car will automatically get exchanged for latest model at no additional cost. No need to sign anything and go through the hassle of signing a new lease – the new car would be delivered to your home or office, all your personal belongings in the car would be transferred to the new car, and the old one would be taken away.
You might be thinking that this still sounds like nothing more than a fancy lease. But it’s actually very different. In addition to covering all maintenance expenses and model upgrades, there are no long term agreements or commitments. If at some point you no longer need the car, you simply turn it in at the end of the month and the payments go away.
Now let’s say that you have 5 employees and got each of them a car under the Car as a Service plan. These same benefits would apply to all of your employee’s cars as well. If 2 employees leave, simply return their cars and keep the rest. Your monthly fee will immediately be adjusted accordingly. You only need to pay for the cars as long as you need them. You always know exactly how much to budget each month because there are never additional expenses for fuel, maintenance, or repairs. And you never have to worry about your car getting old because you will receive a new model every few years.
If Car as a Service really existed, would you entertain this option the next time you need a car? If the answer is “Yes”, then you need to consider Software as a Service the next time you need to buy or upgrade any software applications or computer hardware. The video below will make things clear as to how SaaS works:
What is SaaS?
Software as a service (SaaS) is a model for using software as a subscription service instead of buying the license and installing the application files on a local computer from a CD, or increasingly as a download from a vendor website. According to technology analyst firm IDC, key characteristics of Software as a Service include:
- Network-based access to, and management of, commercial software.
- Server management from a central location rather than at each customer site.
Software as a Service is generally priced on a per-user basis for each application, with billing managed by a major credit card. Sometimes there are minimum user requirements, minimum subscription time periods, as well as additional fees for setup, extra bandwidth and storage.
Who is it for?
In the business-to-business arena, the Software as a Service model is most often focused on the small-medium business segment. Unlike large enterprises, smaller companies have:
- Little or no staff devoted to information technology, and the employees they do have are often stretched thin and are generalists in their knowledge and skills.
- Limited budgets, particularly for capital expenditures.
- More fluid needs for tools and people due to rapid growth and other changing requirements.
- Greater demands on time, as most small business owners and their employees wear multiple hats.
- Growing propensity to operate on a ‘virtual’ model, with employees working from home, at remote work sites, or from rented office space that is shared with other businesses.
The flexibility of software as a service is particularly attractive to small business owners –
- No upfront investment in money or time, and often no contracts.
- Ability to use powerful business applications without having to acquire the specialized infrastructure and staff needed to manage them.
- Power to mix and match applications or add and remove users as needed
- Freedom to work from any location.
How does it work?
The Software as a Service model requires primarily a web browser and an internet connection:
- The customer goes to a website and ‘buys’ a subscription – generally monthly – to the desired Software as a Service applications and number of users. An account is set up with a major credit card for billing.
- The person who places the order (who generally becomes an administrator) is given login credentials and a web URL for secure access to the Software as a Service application.
- Every user added to the account receives his/her own log-in credentials granting them web access to the Software as a Service application(s) for as long as needed and as long as specified terms are met.
Most Software as a Service vendors provide a secure web portal with additional services such as support, along with administrator access for changing the number of users or applications and maintaining other account information.
Since nothing resides on a single hard drive (with a few exceptions in which files must be installed locally), the application can be used from any internet connected PC, providing greater flexibility.
- With pay-as-you-go terms, you pay only for what you use.
- You’re never locked into a license, so there’s no obsolescence and no buyer’s remorse if something doesn’t work out the way you thought it would, or if requirements change. While purchased software cannot be returned, software as a service subscriptions may be cancelled.
- Reap the productivity rewards from an application whenever you want, without a commitment or big upfront investment in money or an evaluation process.
- Add or remove users as staffing needs change, and applications as business needs change.
- Predict and budget how much you will spend, and move the cost from a capital expenditure to a business expense.
- Redirect financial resources, people and time for other needs and priorities.
- With SaaS, the users do not have a copy of the executable file: it is on the server, where the users can’t see or touch it. Thus it is impossible for them to ascertain what it really does, and impossible to change it. SaaS inherently gives the server operator the power to change the software in use, or the users’ data being operated on.
- Users must send their data to the server in order to use them. This has the same effect as spyware: the server operator gets the data. She/he gets it with no special effort, by the nature of SaaS. This gives the server operator unjust power over the user.
Final word on SaaS:
- Software as a Service vendors manage software as a core business with experienced, dedicated staff in professional data center facilities.
- Security, redundancy and resources are equal or superior to those of the largest, most sophisticated enterprises. With today’s security threats and the growing importance of information technology for productivity and competitive advantage, robust facilities are moving from ‘nice to have’ to ‘must have’.
- Bandwidth has become readily available (particularly with the growth of wireless) and highly competitive, making it more dependable as well as less expensive. Today, homes and offices are routinely equipped with high-speed, broadband internet access.
- You will have one less thing to worry about. No servers, systems or software to install, administer, backup, protect and upgrade.