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LEVERAGING THEVALUE OF
SOFTWARE AS ASERVICE:
Key Benef i t s & BestPract ices
A Frost & Sullivan Whitepaper
“Partnering with clients to create innovative growth strategies”
TABLE OF CONTENTS
Executive Summary 3
Software as a Service: Why Now 3
Benefits of SaaS 4
Fast and Easy Deployment 4
No Up-Front Commitment 4
Simpler, Better Management 4
Extensibility 5
Integration 6
Disaster Preparedness 7
SaaS: State of the Market 7
Best Practices 7
Conclusion 8
TABLE OF CONTENTS
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EXECUTIVE SUMMARY
In this increasingly virtual business world, using the right communications technologies toenable collaboration can make the difference between success and failure. And deployingthose tools in the best manner possible is critical to ensuring their value to theorganization. Software as a Service (SaaS) is an attractive option for companies of all sizesand industries. The benefits of SaaS are many: Deployment is quick and easy; you pay onlyfor what you use; IT doesn’t have to manage capacity, performance or maintenance; it’seasy to extend use to partners, suppliers, customers and other users outside theorganization’s firewall; and users can test-drive applications without having to commit tolong-term implementations or get locked into a single vendor or solution. What’s more,SaaS supports integration, which is especially important as companies make applicationspart of broader technology deployments and business processes; and disasterpreparedness, in the event of a business interruption.
Companies are embracing Software as a Service, and for good reason. This whitepaperoutlines why that is, and how your organization can reap the benefits.
SOFTWARE AS A SERVICE: WHY NOW
Software as a Service (SaaS) is an attractive option for companies of all sizes andindustries. But SaaS vendors should not be confused with ASPs, or application serviceproviders, which were a popular way to get hosted application services several years ago.The SaaS model is significantly different from the ASP one, making SaaS providers muchmore reliable, cost effective, and better at supporting today’s virtual organizations.
ASPs generally stuck to the traditional client-server model, and simply managed theservers without making any modifications to the delivery system. They also had difficultyscaling up and managing multiple customer accounts, since they effectively had to addmore infrastructure every time they signed a new client. SaaS vendors, on the other hand,rely on net-native applications, which significantly improves their performance. And theydon’t require dedicated servers for each client site, making scalability and performancemuch easier to achieve. That keeps the businesses thriving, and helps them pass savingsonto their customers.
SaaS offers several specific advantages for deployments of unified communications,conferencing and collaboration applications, since it mitigates so many of the issues withunified communications today. SaaS offers enterprises choice, which is especiallyimportant when trying to integrate a variety of applications—many of which employeeshave already been using, and therefore grown accustomed to.
And although unified communications applications are designed to make life simpler forend users, they add complexity for the IT department, since what were once disparate
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applications now need to be integrated on the back end, and eventually madeinteroperable. Despite what many on-premises vendors promise, that’s not possible out ofthe box today—at least, not for all the components of a unified communicationsapplication.
SaaS also offers benefits for companies of all sizes: Smaller organizations with limited ITresources and the desire to deploy unified communications will find it appealing, sinceSaaS lets them tap the applications without complicated and expensive on-sitedeployments. But even very large enterprises can take advantage of SaaS as a way to testthe unified communications waters, and offer disparate end users, or groups of end users,the applications they want, from the vendors they prefer, right off the bat. Largerorganizations will also see significant deployment and maintenance advantages with SaaS,as it is easy and efficient for them to deploy and support software on thousands ofremote PCs.
KEY BENEFITS OF SAAS
Fast and Easy Deployment
Unlike most on-premise software, software as a service is quick and easy to deploy acrossa large enterprise. And because they’re hosted, SaaS applications don’t require serverhardware or software installations, either. All a company has to do is sign up, and they getimmediate access to everything they need—the client software, back-end systems, andtechnical and end-user support.
No Up-Front Commitment
Software deployed on net requires an up-front budgetary commitment, as well as the stafftime and skills to install and support it. Most SaaS vendors charge per user, which allowscompanies to scale conferencing and collaboration apps, for example, to support multipleusers at any given time without having to pay for every user in the organization. And asusage increases within the organization, companies can easily and quickly deploy theservice to more users, ensuring that everyone can participate in conferencing andcollaboration on an ad-hoc, as-needed basis. Since SaaS applications typically include allupgrades and updates, companies can ensure their users have access to the latest andgreatest software as soon as it’s available.
Simpler, Better Management
SaaS providers routinely upgrade their software and services to ensure their customersalways have access to the latest and greatest applications. And because the SaaS providermanages all upgrades and security patches, IT staff can focus their time and efforts onother issues more closely related to the company’s core competency—that is, their
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business. This can offer significant cost and productivity benefits, since although unifiedcommunications and collaboration applications are designed to simplify communicationsfor end users, they actually add complexity for the IT department. As companies give theirend users access to more and more communications applications, the pressure on IT staffto support them grows; SaaS vendors can significantly lower the resulting economic andresource costs. (Please see Figure 1.)
Furthermore, SaaS providers take care of their network and applications performance,which also frees up a company’s IT staff to focus on more business-critical tasks. Andsince most SaaS providers continuously improve on their own networks and offerings, endusers will get immediate access to the best, simplest experience possible. That encouragesusage throughout the enterprise, which in turn drives ROI.
Figure 1: SaaS: A Model for the Future
SaaS providers also can deliver a variety of related applications, such as audio, video andweb conferencing, from a single source and with a single point of contact for support andbilling. This simplifies matters for customers, who know exactly who to speak with for alltheir business and services needs.
Scalability and Extensibility
One of the biggest benefits of SaaS is that it is both highly scalable and extensible. Thisensures companies can give access to the software to everyone in their organization onan as-needed basis. This is especially attractive for conferencing and collaboration
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SaaS Vendor
Software Updates Support
Office Employees
Partners and
Customers
Corporate IT
Mobile Workers
Home Employees
applications, which not everyone needs access to all the time, but which all employeesneed access to at least some of the time. That keeps costs down while ensuring everyonecan participate in meetings and events when they need to.
SaaS also makes it easier for companies to support remote workers, since it doesn’tmatter where those workers are located—they can easily access and use the softwareand any upgrades. End users can also rely on the SaaS provider for technical support,which also mitigates the need for them, or a company’s IT staff, to be located in a specificplace.
Furthermore, SaaS applications are extensible, meaning they can be offered to usersoutside an organization’s firewall. This, too, is highly attractive for conferencing andcollaboration applications. Companies often need to collaborate with partners, suppliersand even customers located outside their borders; with on-premises applications,extending those apps is often complex, if not impossible. SaaS applications, on the otherhand, are easily extended to anyone, anywhere, making it possible for companies to shareinformation and technology with anyone they choose to, regardless of relationship orlocation.
Integration
A key issue surrounding software today is the need to integrate a variety ofapplications—including conferencing and collaboration—into a unified communicationsinfrastructure. SaaS takes away the pain of integration, ensuring companies can benefitfrom the technologies without having to do the heavy lifting on the back end. This isespecially critical for conferencing and collaboration applications, since users want andneed to access multiple communications applications at once. For example, 39% of endusers say they use Web collaboration during their video conferences, according to a 2006study by Frost & Sullivan.
Figure 2: Unified Communications in the Enterprise
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Data
Voice
Video
IM
Presence
Unified Messaging
VoIP
Scheduling Calendaring
Shared Workspaces
Product-ivity Tools
Social Networking
3rd Party Apps Integration
Business Process Integration
Integration drives unified communications, a key trend in the conferencing andcollaboration market. (Please see Figure 2.) Frost & Sullivan expects IT executives todeliver their critical communications applications—including audio, video and webconferencing—to all their knowledge workers, from a single entry point and available withthe click of a mouse. SaaS vendors can significantly improve the ease and availability ofsuch integrated applications.
Business Continuity
Because SaaS applications are offered off site on a hosted basis, users are much betterprepared in the event of an unexpected business interruption. If a company’s internal ITsystems go down or are temporarily unavailable, the SaaS provider can deliver andsupport the business applications for as long as necessary in the interim. This is especiallyvaluable for communications technologies, which are so important in the event of abusiness interruption to ensure that employees can stay connected during the emergency,getting the business back on track.
SAAS: STATE OF THE MARKET
Frost & Sullivan predicts robust growth for many applications well served by Software asa Service in the next five years. This is especially true for specific communicationstechnologies, including audio, video and web conferencing and collaboration. For instance,Frost & Sullivan forecasts that almost 70% of the overall Web conferencing market will beservices in 2011.
BEST PRACTICES
IT and business managers evaluating Software as a Service should consider several factorsas they make their decisions on whether to use a hosted solution, and from whatvendors. If the organization is growing; if employees need to be able to collaborate withone another and with people outside the organization; if the goal is eventually to offer acomplete suite of integrated applications over time, as need requires; and if uppermanagement wants to avoid costly upfront expenses and ongoing maintenance charges onthat up-front capital, then SaaS makes sense.
When selecting a vendor, several considerations should come into play. Most important, ofcourse, are security and performance—the vendor’s network and access to a company’ssoftware apps must be secure, and performance must be guaranteed 24/7, especially forreal-time communications applications. Also critical are services and support, ensuringthat applications are available to end users whenever and wherever they need them.Companies should also ask their SaaS vendors about integration opportunities, bothamong the various technologies that particular vendor supports, and with any otherapplications the company may have deployed.
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Finally, companies should make sure the SaaS pricing model is right for them and theirorganization—so that they can scale the technology up or down as needed, and alsoencourage its use throughout the enterprise.
CONCLUSION
SaaS is changing the way companies buy and deploy software, and for good reason. MostSaaS providers charge per user or usage, allowing companies to stay flexible with theirapplications purchases, scaling up or down as needed and offering applications to peopleoutside the organization as appropriate. This model also encourages usage within theorganization, boosting productivity and the technology’s ROI.
SaaS also allows companies to stay agile and flexible as their business needs change andgrow; frees up the IT staff to focus on other strategic business issues; is easier to manageand support; supports quick and easy deployment and integration; and helps keepcompanies running in the even of an interruption to the business or its IT infrastructure.Together, these benefits allow organizations of all sizes to stay competitive and productivein today’s global, fast-changing world.
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ABOUT FROST & SULLIVAN
Frost & Sullivan, a global growth consulting company, has been partnering with clients tosupport the development of innovative strategies for more than 40 years. The company'sindustry expertise integrates growth consulting, growth partnership services and corporatemanagement training to identify and develop opportunities. Frost & Sullivan serves an extensiveclientele that includes Global 1000 companies, emerging companies, and the investmentcommunity, by providing comprehensive industry coverage that reflects a unique globalperspective and combines ongoing analysis of markets, technologies, econometrics, anddemographics. For more information, visit http://www.frost.com.
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