Software as a Service Software as a Service (SaaS) (SaaS)

ContentsContents

Brief Background informationBrief Background information SaaS ArchitectureSaaS Architecture Financial ConsiderationFinancial Consideration Case StudyCase Study ConclusionConclusion Q & AQ & A

Intro to SaaS - Definition Intro to SaaS - Definition

Software as a serviceSoftware as a service ( (SaaSSaaS ) is a ) is a model of model of software deliverysoftware delivery where the where the software company provides maintenance, software company provides maintenance, daily technical operation, and support for daily technical operation, and support for the software provided to their client. the software provided to their client.

It assumes the software is delivered over It assumes the software is delivered over the internet. the internet.

Software delivered to home consumers, Software delivered to home consumers, small business, medium and large small business, medium and large business business

Intro to SaaSIntro to SaaS

The web as a platform is the center pointThe web as a platform is the center point Web-browser acting as a thin-client for Web-browser acting as a thin-client for

accessing the software remotely across the accessing the software remotely across the internet. internet.

Network-based access to, and management of, Network-based access to, and management of, commercially available (i.e., not custom) commercially available (i.e., not custom) software software

application delivery that typically is closer to a application delivery that typically is closer to a one-to-many model (single instance, multi-tenant one-to-many model (single instance, multi-tenant architecture) than to a one-to-one model, architecture) than to a one-to-one model, including architecture, pricing, partnering, and including architecture, pricing, partnering, and management characteristics management characteristics

SaaS - Pros SaaS - Pros Stay focused on business processesStay focused on business processes Change software to an Operating Expense instead of a Change software to an Operating Expense instead of a

Capital Purchase, making better accounting and budgeting Capital Purchase, making better accounting and budgeting sense. sense.

Create a consistent application environment for all usersCreate a consistent application environment for all users No concerns for cross platform supportNo concerns for cross platform support Easy AccessEasy Access Reduced piracy of your softwareReduced piracy of your software Lower CostLower Cost

For an affordable monthly subscription For an affordable monthly subscription Implementation fees are significantly lowerImplementation fees are significantly lower

Continuous Technology Enhancements Continuous Technology Enhancements

SaaS - ConsSaaS - Cons

Initial time needed for licensing and Initial time needed for licensing and agreementsagreements TrustTrust, or the lack thereof, is the number one , or the lack thereof, is the number one

factor blocking the adoption of software as a factor blocking the adoption of software as a service (SaaS).service (SaaS).

Centralized controlCentralized control Possible erosion of customer privacy Possible erosion of customer privacy

Absence of disconnected useAbsence of disconnected use

SaaS ArchitectureSaaS Architecture Fueled by Fueled by

Bandwidth technologiesBandwidth technologies The cost of a PC has been reduced The cost of a PC has been reduced

significantly with more powerful computing but significantly with more powerful computing but the cost of application software has not the cost of application software has not followedfollowed

Timely and expensive setup and maintenance Timely and expensive setup and maintenance costscosts

Licensing issues for business are contributing Licensing issues for business are contributing significantly to the use of illegal software and significantly to the use of illegal software and piracy.piracy.

High-Level Architecture High-Level Architecture

There are three key differentiators that separate There are three key differentiators that separate a well-designed SaaS application from a poorly a well-designed SaaS application from a poorly designed onedesigned one scalablescalable multi-tenant-efficientmulti-tenant-efficient configurableconfigurable

Scaling the application - maximizing Scaling the application - maximizing concurrency, and using application concurrency, and using application resources more eff icientlyresources more eff iciently i .e. optimizing locking duration, statelessness, i.e. optimizing locking duration, statelessness,

sharing pooled resources such as threads and sharing pooled resources such as threads and network connections, caching reference data, network connections, caching reference data, and part it ioning large databases.and part it ioning large databases.

High-Level Architecture (con’t)High-Level Architecture (con’t)

Multi-tenancy – important architectural Multi-tenancy – important architectural shift from designing isolated, single-shift from designing isolated, single-tenant applications tenant applications One application instance must be able to One application instance must be able to

accommodate users from multiple other companies at accommodate users from multiple other companies at the same timethe same time

All transparent to any of the users. All transparent to any of the users. This requires an architecture that maximizes the This requires an architecture that maximizes the

sharing of resources across tenants sharing of resources across tenants is still able to differentiate data belonging to different is still able to differentiate data belonging to different

customers.customers.

High-Level Architecture (con’t)High-Level Architecture (con’t)

ConfigurableConfigurable - - a single application instance on a single application instance on a single server has to accommodate users from a single server has to accommodate users from several different companies at onceseveral different companies at once To customize the application for one customer will To customize the application for one customer will

change the application for other customers as well. change the application for other customers as well. Traditionally customizing an application would Traditionally customizing an application would

mean code changesmean code changes Each customer uses metadata to Each customer uses metadata to configureconfigure the the

way the application appears and behaves for its way the application appears and behaves for its users. users.

Customers configuring applications must be Customers configuring applications must be simple and easy without incurring extra simple and easy without incurring extra development or operation costsdevelopment or operation costs

Saas FinancialsSaas Financials

4 ways software companies are pricing their products4 ways software companies are pricing their products Open Source – free basic products but charge a fee Open Source – free basic products but charge a fee

for the upgrade to the premium product (i.e. Apache, for the upgrade to the premium product (i.e. Apache, Linux, etc)Linux, etc)

License software – main way its being done. License software – main way its being done. Customer like this way because they own the Customer like this way because they own the software as an assetsoftware as an asset

Leased Software – deployed at customer site but Leased Software – deployed at customer site but leased for a time period. Used in the days of the leased for a time period. Used in the days of the mainframemainframe

SaaS – subscription pricing. Like leasing is SaaS – subscription pricing. Like leasing is considered and expense but upgrades and considered and expense but upgrades and maintenance is free and seamlessmaintenance is free and seamless

Saas Financials (con’t)Saas Financials (con’t) Legal should be involved in the acquisition of mission-Legal should be involved in the acquisition of mission-

critical SaaS softwarecritical SaaS software Companies are losing control of their data in the SaaS modelCompanies are losing control of their data in the SaaS model Depending on the service provider for security and data access.Depending on the service provider for security and data access.

Need to setup contractual relationship with the SaaS Need to setup contractual relationship with the SaaS providerprovider Setup escrow accountSetup escrow account With conditions of being able to run application in house With conditions of being able to run application in house Ability to move data from current provider to new locationAbility to move data from current provider to new location

Also Service Level Agreements (SLAs) forAlso Service Level Agreements (SLAs) for Availability, response times, notifications of outagesAvailability, response times, notifications of outages Data integrity, data privacy, frequency of backup, support and Data integrity, data privacy, frequency of backup, support and

disaster recoverydisaster recovery

Saas Financials (con’t)Saas Financials (con’t)

CIO decides if SaaS software will benefit CIO decides if SaaS software will benefit IT while CFO decides if it is economical for IT while CFO decides if it is economical for the whole firmthe whole firm Leasing vs BuyingLeasing vs Buying

Similar to decision of leasing or buying a carSimilar to decision of leasing or buying a car Need to compare costs that effect cash flows such Need to compare costs that effect cash flows such

as depreciation, interest on financing, tax and as depreciation, interest on financing, tax and opportunity costopportunity cost

Use an experience AccountantUse an experience Accountant

Case Study - Software4Rent.biz Case Study - Software4Rent.biz Software4Rent.biz provides casual or long term software application Software4Rent.biz provides casual or long term software application

rental, enterprise wide software deployment and management rental, enterprise wide software deployment and management OfferingsOfferings

No contracts to sign - rent for as long as you want No contracts to sign - rent for as long as you want Manage, deploy and track leased software resources more effectively in Manage, deploy and track leased software resources more effectively in

real-time.real-time. No cost software upgradesNo cost software upgrades Can 'Top up' at minimal cost in times of peak software use Can 'Top up' at minimal cost in times of peak software use Systems administrators can allocate application software to users in real Systems administrators can allocate application software to users in real

timetime Change the allocation of licenses as required and reduce the number of Change the allocation of licenses as required and reduce the number of

licenses that the company needs to buy.licenses that the company needs to buy. Save work to local hard drives, or on their servers if you are a pay by-Save work to local hard drives, or on their servers if you are a pay by-

the-month user. the-month user. Allow users to rent software on an hourly, daily, weekly or monthly basisAllow users to rent software on an hourly, daily, weekly or monthly basis

Software offering & PricingSoftware offering & Pricing

VendorVendor ApplicationApplication HourlyHourly DailyDaily WeeklyWeekly MonthlyMonthly CategoryCategory

MicrosoftMicrosoft Office 2003 ProfessionalOffice 2003 Professional 1.651.65 6.606.60 19.8019.80 49.5049.50 Office SuiteOffice Suite

MicrosoftMicrosoft Project Professional 2003Project Professional 2003 3.953.95 15.8015.80 44.5044.50 97.9097.90 ManagementManagement

MicrosoftMicrosoft Visio Professional 2003Visio Professional 2003 1.951.95 7.807.80 23.4023.40 58.5058.50 DrawingDrawing

MicrosoftMicrosoft Word 2003Word 2003 0.750.75 3.003.00 9.009.00 22.5022.50 DocumentDocument

MicrosoftMicrosoft Excel 2003Excel 2003 0.750.75 3.003.00 9.009.00 22.5022.50 AccountingAccounting

MicrosoftMicrosoft PowerPoint 2003PowerPoint 2003 0.750.75 3.003.00 9.009.00 22.5022.50 PresentationPresentation

MicrosoftMicrosoft Access 2003Access 2003 0.950.95 3.803.80 11.4011.40 28.5028.50 DatabaseDatabase

MicrosoftMicrosoft Publisher 2003Publisher 2003 0.950.95 3.803.80 11.4011.40 28.5028.50 DrawingDrawing

MicrosoftMicrosoft Outlook 2003Outlook 2003 0.950.95 3.803.80 11.1011.10 28.5028.50 EmailEmail

MicrosoftMicrosoft InfoPath 2003InfoPath 2003 0.950.95 3.803.80 11.4011.40 28.5028.50 ManagementManagement

R ProjectR Project R Statistics ProgrammingR Statistics Programming 0.350.35 1.501.50 4.504.50 9.959.95 StatisticsStatistics

Future shop Microsoft Office Word 2007 $309

Cost Per Usage Chart of MS WordCost Per Usage Chart of MS Word

Low Low UsageUsage

Medium Medium UsageUsage

High High UsageUsage

Software4RentSoftware4Rent $3/day X $3/day X 10 times/mth = 10 times/mth = $30/mth X $30/mth X 12 mths= 12 mths= $360/year$360/year

$9/week X 40weeks = $9/week X 40weeks = $360/year$360/year

$22.5/month X 16 $22.5/month X 16 month = $360month = $360

BuyBuy $360 inc tax$360 inc tax

ConclusionConclusion

Get over initial hurdlesGet over initial hurdles Adopting SaaS in the enterprise has to be analyzed Adopting SaaS in the enterprise has to be analyzed

for economic and efficiency reasonsfor economic and efficiency reasons A lot of initial planning and negotiating with the A lot of initial planning and negotiating with the

solution provider- security, data access, legal, etcsolution provider- security, data access, legal, etc Long term BenefitsLong term Benefits

Easy AccessEasy Access Reduced piracy of your softwareReduced piracy of your software Lower CostLower Cost Continuous Technology Enhancements Continuous Technology Enhancements

Questions?Questions?