Leading Edge:Software as a Service: Back with a Vengeance

The concept of software as a service or SaaS is nothing new. In fact, it was

introduced in the late 90's under the banner of application service providers,

as a low cost alternative to installing the actual application in-house. It

didn't really succeed then due to a number of issues. The bandwidth costs were

prohibitive at that time, making it extremely unfeasible to give employees

remote access into a hosted business application. Web-based access technologies

hadn't really matured to the extent they have today. Client/Server architecture

was the 'in' thing then, as a result of which organizations preferred buying

licensed software. Moreover, organizations were more comfortable hosting their

business applications in house, as they felt it was more secure. As a result,

the ASP model failed miserably. We didn't hear of any further developments on it

until recently. Interestingly this time, it seems to be making a strong come

back, and all the initial signs indicate that it's likely to succeed this time.

Let's see what has changed to cause this.

Bandwidth costs were the biggest hurdle to the success of SaaS, which have

come down considerably now. The other issue is that packaged software is more

expensive. Not only do you have to purchase its license, but you also have to

pay for a maintenance contract. Further, you need to retain an IT team to manage

it, secure it with the latest patches and updates, customize it, etc. In fact,

software upgrades of business applications are also very expensive.

Anil Chopra,  Editor

SaaS doesn't require any of this. You just need to pay a fixed monthly fee

for it, and the vendor takes care of the rest. Moreover, the mobility revolution

has also happened, and a lot of employees spend time travelling these days or

even working from home. The SaaS model fits in perfectly here, because employees

can access their business applications through a web browser anytime and from

anywhere.

Another factor that's going in favor of SaaS is IT manpower. Today, companies

are finding it difficult to find and retain manpower for their IT setup. This

was also the result of a survey we conducted of CIOs in July this year, to find

out the issues they faced while managing their manpower. Now that IT has become

extremely important for business, organizations can't afford to have this kind

of a manpower churn out. They need a stable team that can handle the IT

infrastructure effectively. The SaaS model can tackle this problem effectively

because the vendor or service provider would always have a pool of IT resources

ready, who would provide the support.

Lastly, the SMB segment in India has opened up, and SaaS gels perfectly with

their requirements, because of its lower cost as compared to purchasing and

hosting the application in house. So hopefully, one should see a lot more action

in this space in the near future.