Software as a Service (SaaS) Service Model – Benefits and Issues

Benefits of SaaS Service Model

Cloud Computing SaaS Model offers the full stack of ICT service and full stack means it delivers an IT Solution for the organisation. The key benefits of SaaS service model can be listed as follows,

  1. One Standard Solution: SaaS solutions are made using industry standard best practice business processes for making them adaptable and fit for entire industry. The SaaS solution offering is standard and available across the whole organisation for use based on needs. This gives the organisation real time usage across the world and more importantly saving ICT costs of duplicate or different solution at different locations.
  2. Self Service Model: SaaS solution offering works on self-service model where by the business users can choose and pick the services options they need. The solution support issues are also self-service based making the business users to check and receive support from one central support.
  3. Pay for Use: SaaS solution offering allows organisations to pay for use, it means organisation do not incur or worry about ICT additional costs as they pay only for number of users using the specific service(s).
  4. Reduced Costs: SaaS solution offering allows organisations to reduce their ICT capital expenditure costs as the solution is ready to use and minimal to no upfront investment required to start using the SaaS solution. On the other hand as there is no ICT Infrastructure and other components ownership, the organisation only incurs the usage costs and has ease of ramp up and ramp down usage, thus allowing higher flexibility.
  5. Faster Time to Market: SaaS solution offering reduces the time for preparation and deployment to the lowest possible as the solution is available for use and requires minimum configuration, setup and user training time to start using the solution. As the whole organisation uses only one solution any changes or new functionality can be also introduced in one go to the whole organisation.
  6. Standard Interfacing: SaaS solution offerings are used by multiple organisations so these are made using industry standard best practices processes and ICT standard for cross system communications and message exchanges. This makes organisations to connect with their customers and consumers in a standard and easy to use way.

Issues of SaaS Service Model

Cloud computing and SaaS service offering by service providers is still evolving. The key issues of SaaS service model can be listed as follows,

  1. Security: Security is the key concern for all organisations that think of SaaS Service adoption. This emerges from the fact that everyday unsecured internet sites and at times even the highly secured internet sites are hacked and data is stolen. SaaS service offerings are internet based and concerns organisations have is about securing their identity and organisation data.
  2. Standards: Cloud computing and SaaS offerings are still evolving and along with them the standards for such services are also still evolving. Type of clouds and mashing of multiple providers e.g. SalesForce.com offering Saas Channel CRM solution while using Amazon IaaS / PaaS service to host it.
  3. Big Data: Data Management is a growing concern for all organisations and its specially an issue for SaaS service solution as the organisation does not own any solution component and pays only of usage of the services. The concern is how the data captured can be stored in organisations data warehouse with ensuring that the data is encrypted while exchange and securely stored as well as usable for generate reports and insights required for decision making.
  4. Change: While adoption of SaaS service is fairly simple, the concern and issue is of switching from one SaaS solution to other and how the transition as well as underlying information exchange from one vendor to another vendor to be handled.
  5. Strategy and Governance: For Cloud Computing Service adoption organisations must have a clear strategy and governance structure and processes. Strategy will help identify in what areas what types of cloud services can be adopted while governance will help ensure clear understanding of roles and responsibilities, compliance and risks.
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Cloud Computing Service Evolution and Predictions

Cloud computing is opening doors for businesses and organisations to have IT services available as utility service with predictable cost and quality as per customer needs and pay for use models while still allowing flexibility of needs based selection of SaaS, PaaS, IaaS service and its components.

IT is becoming an essential part of companies DNA and Fabric as organisations realize that ICT services and solutions will give them a competitive edge to achieve their growth using real time information and insights as well as making products and services available using digital presence. Organisations are awakening and becoming to redefine their strategies to become a real time company, at the core of this is IT but now its not just another IT project but a business transformation enabled with word class IT solutions and services.

In most organisations ICT services are already served as Shared Service Model for past decade and organisations have become mature in having ICT services delivered using shared service model. The move from Shared Service Model towards Cloud Computing is a natural progression where organisations go from Shared Services to Utility Services model.

Internet and the need for doing things online and real time is now well embedded in most organisations as well as consumers. This is leading towards having ICT services being available through internet around the clock and in a secured manner. Could Computing Services and Service Model is fulfilling this need.

Forrester Research white paper of he Evolution Of Cloud Computing Markets” of july 2010 shows that organisations are spending around USD 2.4 Trillion for ICT services. Cloud computing is opening up a new space where the organisations will transition towards. A big part of the overall ICT spending would be moving towards cloud computing services. A macro shift of services already began from year 2009 and its expected to grow rapidly in coming year.

The report from delloite consulting of year 2009 suggests that cloud computing services would grow to the size of USD 1 Trillion in current decade and would continue to grow further. Cloud Services offerings from major players like Microsoft – Office 360, Azure and SAP – Business By Design and Business One Cloud and Amazon EC2 and S3 will lead the transition of Traditional ICT services and solutions to Cloud SaaS, PaaS and IaaS services.

Cloud Computing Services are on number 4 position of IDC’s Top 10 Predictions report of 2012. IDC report suggests that Spending on public and private cloud services, and the building of those services (the “cloud arms dealer” opportunity), will reach USD $60 billion. Amazon will join the $1 billion IT vendor club, and the strategic focus in the cloud will shift from infrastructure to application platforms and the race to build the largest portfolios and ecosystems around those platforms.

Cloud Computing Basics

The term cloud computing came in existence is last decade while the concept and types of cloud computing services existed in one or the other form for past two decades. The name cloud computing is given to specify that organisations don’t have to worry about where there IT Infrastructure and Application Software are hosted, instead organisations can focus on the IT services they need to meet their fast changing customer requirements.

In past three decades business process automation has gone to the extent that IT has become a key part of all business transformation initiatives to help automate and enable the organisations to achieve their goals. IT services are more and more seen similar to utility services that are reliable, scalable and paid by usage. Cloud computing is also focusing on provide IT services as utility while keeping in mind that utility service needs vary from organisation to organisation. E.g. The power supply and water are the generic utility services and full fill basic need of electricity and water for the customer. But as the need for customer varies so the utility services vary and accordingly the service costs. The need of an industrial organisation is different to the need of an individual customer.

Cloud Computing focuses on providing IT services as utility services and has three types of service offerings which are briefly explained below,

SaaS – Software as a Service : SaaS offering covers the full stack of IT from the hardware all the way up to the software application service. The service is focused on pay for use and generally operates on the pay per use based on number of users and duration of use. E.g. Microsoft Office 360 costs $30 per user per month for online office application software usage.

PaaS – Platform as a Service: PaaS offering covers the IT stack up to providing a platform that business can use to build / manager their own applications. This service is also focused on pay for use and operates based on type of platform and number of applications to be run on the platform as well as any value added service additions. E.g. A company offering PHP and My SQL platform that can be used by organisations to build and host their own applications.

IaaS – Infrastructure as a Service: IaaS offering covers the IT stack upto the Infrastructure layer, in simple words up to Operating System level. The service is also focused on pay for use and operates based Infrastructure usage like hardware and storage. E.g. Hosting providers like Rackspace, Amazon and T-systems offering standardized, virtualized and secured infrastructure hosting that individuals as well as organisations can use for hosting their application platform and application software solution.

What does it mean to be moving towards cloud computing…

Cloud computing has started in the decade of 2000 and has been becoming a future of Data Centre Hosting. It is closely linked to the term “Platform as a Service” for infrastructure hosting related solutions. It aims to make the business Asset Free and move them towards Pay as you Go model. Given the dynamic economic situations, growth in number of internet sites and growing number of individuals becoming self made entrepreneurs is igniting the need for Cloud Computing and Cloud Hosting solutions.

Cloud computing is the buzz word and real good thing for individuals, small and medium enterprises. The need for individuals, small and medium enterprises is driven by low cost, pay as you go strategy while they don’t have to take care of assets, facility and services. They simply buy the so called Utility services from existing cloud solution providers and start using the hosting almost instantly. The challenge still remains on ensuring the effective use of cloud solutions in the right manner. Like all technology changes the cloud solutions are also evolving and it will take some more time for people & businesses to get use to the Cloud solutions effective use for their needs.

For the multinationals (MNCs), cloud computing and hosting are still seen as risky as well as time consuming in terms of transformation from existing asset based data centre hosting to cloud hosting solutions. The MNCs are moving towards private cloud solutions that enable their businesses with high secure cloud solutions based on their needs. For MNCs the other challenges are,

  1. Multiple locations with all sizes of office, small, medium, big, requiring different scale of solutions and accessibility needs
  2. Latency issues due to remote users, remote sites, 3rd party access
  3. Multiple vendors involved in IT end to end service delivery chain
  4. Every changing speed of acquisition and disentanglements due to dynamic economic situations and drive for growth
  5. Wide variety of application platforms resulting in complex hosting needs and making upgrades even more difficult
  6. Multiple new and change projects in IT service delivery chain
  7. Scattered or Consolidated but too big, multiple billing within IT service delivery chain from various vendors
  8. Loss of touch and feel (Control) over assets and their management
  9. Multi company shared datacenters can pose security and control risks if not managed properly

Like all new innovations Clould Computing/Hosting is also a good thing from future perspective and is evolving. Companies are preparing to be ready for the next versions of cloud computing/hosting solutions. In few years from now the real view and use of cloud computing will come to light as more and more businesses/individuals start to use it and demand/suggest/ask for improvements in services.