Is SaaS right for your business?

By Guest    July 2, 2009

SaaS stands for Software-as-a-Service. It is sometimes referred to by the terms “on demand” or “cloud computing” and is gaining in popularity with smaller business. Traditionally, desktop software was installed on a single computer for one person to use while enterprise software was installed on large servers with many users connecting to it via a client application (or increasingly through a browser).  SaaS vendors run their enterprise scale software in large data centers and allow individual companies and users to use the software remotely over the internet. This has become big business – Salesforce.com became the first company of this type to reach over $1B in annual revenue.

In this two part post, Guest Author Vikram Prashar will look into why you might use SaaS applications and how to mitigate the risks. Vik is an IT Consultant who has held VP roles at large organizations managing IT departments.

Why SAAS?

SAAS has steadily been emerging as a very popular method of operation for companies of all sizes.  For larger firms, they like the ease of implementation, ability to easily charge back costs to departments, and low overhead required for these applications.  Smaller firms have benefited from it in many ways too.  The biggest advantage is they get pricing normally offered to large corporations.  Additional benefits include:

• Increasing costs of running a data center
• Server consolidation
• Reduced capital investment
• Reduced energy usage
• Ability to use the latest technology and tools
• Business continuity advantages
• Reduced IT staffing needs
• Ability to run applications from any location

These are all good reasons why more and more companies are relying on SAAS for their ERP needs.  Applications are becoming more of a commodity that can be purchased on demand on a per user per month basis.  As the company grows licenses can be purchased or returned generally with little impact on software contracts.  From an end user point of view, there are really not a lot of differences between a SAAS vendor and an internal IT department.  Generally an application on a server located on the same local network will perform better than on the cloud, but for many applications the differences are not significant enough to outweigh the numerous benefits of hosted applications.

Basic Concerns:

Of course just because the software is essentially outsourced, it doesn’t mean we can ignore all the other components of application service.  Many of the same concerns that apply to in-house applications also apply to SAAS.  These include:

• Security
• Backups & Restores
• Application availability
• SLA’s for uptime and performance
• Application support- patches, software updates, etc.

In Part 2 Vik will give you suggestions on how to mitigate these risks. For further information, you can reach Vikram Prashar at vprashar@prasharconsulting.com.