This definition from Microsoft accurately understands how SaaS or Software as a Service must be defined: “Software deployed as a hosted service and accessed over the internet”. Conventionally, software is distributed in boxes with a license and often with a maintenance contract. With SaaS, a new way of doing business has come up which relieves service providers of all such formalities.

Therefore, under SaaS, instead of purchasing a copy of the licensed software for individual computers, a customer simply pays a subscription fee and gets the license to use software for a time period. This feature has opened new vistas of productivity and competition to businesses especially in the small and medium sector. Businesses that were non-aware or partially-aware of the trend created by SaaS can no longer ignore the strong value offered by the access of previously inaccessible production tools. This is primarily because the benefits associated with this trend are innumerable.

Under a SaaS approach, the application resides on the remote machine belonging to the vendor rather than the customer’s own server and is accessed via an internet connection as a ‘service’. So, a customer simply rents the software rather than buying it. Therefore, the software and the hardware both invariably reside in the premises of the vendor. The arrangement is initially lopsided for the vendor. This is because SaaS applications usually work on a pay per user basis for organizations that have a limited number of users. This way the profits for the provider are low initially compared with the high license fee of complete software. It is the recurring, maintenance costs that make up to the vendor.

Therefore, the idea of providing software as a service is different from delivering other services over the internet because our service was designed particularly to be able to suit web technologies such as the browser. Therefore, SaaS technologies are more web native than others. Another big advantage is that a SaaS application can be accessed from anywhere in the world using the internet, as opposed to the traditional systems where it works best only within the customer’s own network.

Adding to the benefits of SaaS systems is this beneficial feature. A customer can try the service for a few days and it doesn’t take months of time to actually implement it in the company structure. The set-up time is usually in days, as opposed to months or even years in the traditional systems. Most vendors offer a trial period for their services for a minimal fee associated with it. There are certain areas that are recognized as better suited for use of Software as a Service than the areas involving high and precise security like confidential financial systems of an organization. The suitable areas comprise CRM and HR applications, collaboration tools, web conferencing tools and business email clients, to name a few.

Although SaaS is a big success, some misconceptions are heavily associated with it. The first and foremost being that SaaS is less secure and less reliable than an on premises application. Data is the most important asset of any business and at the same time is also the heart of SaaS. By adopting SaaS, any business has to compromise and surrender a certain level of control over its data to the SaaS vendor. The trust earned by the vendor plays a vital role in this and hence it is essential that the vendor builds up a data-architecture that is robust and secure at the same time. An important consideration here while selecting a vendor is whether the data center is hosted within the premises of the vendor organization or not. If it is branched out to a third party hosting specialist, it is important to check the credentials of this third party host and to make sure if the data being confided is in safe hands. It has to be made sure that the organization has documented all its security infrastructure and protocols, and is willing to share that information with its clients.

But if we look at it carefully, apart from a few bumps on the road, there hasn’t been a major compromise on SaaS operations reported so far. There has not been a single show-stopper security breach that can generalize the statement that SaaS architecture has any security constraints associated with it. Another common misconception associated with SaaS is that it is a peripheral trend. If we look at the popularity it has gained over a short period of time, it’s easy to guess that it is becoming a mainstream movement in itself.

SaaS providers such as Microsoft, Oracle and Red Hat have huge success stories to flaunt about with striking growth rates of 25.7 percent, 24.9 percent and 33 percent respectively! Changing the game from a propriety license based model to a subscription based model has definitely been a great paying choice to not only these software giants but also smaller companies like Omniture. The trend, without a doubt, is on the roll!