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Feature: The emergence of SaaS

Feature: The emergence of SaaS

The need for better IT economies is just one of the factors driving Software-as-a-Service (SaaS) across all types of organisations. ARN looks at why SaaS is becoming a preferred model for software delivery in today’s economic environment.

Advancements in on-demand technology, particularly through increased bandwidth, have opened the floodgates for enterprises and SMBs to utilise economies of scale and to access applications previously only available to larger companies.

Software-as-a-Service (SaaS) has moved from being a curio just a few years ago, to becoming a mainstream model of delivering applications for both large and small businesses wanting better economies of scale. Today, more and more organisations are looking to on-demand software tools and cloud computing as a more effective way of running their business.

The current economic crisis is also accelerating the adoption of SaaS and its growth is ever more apt as tighter capital budgets demand leaner alternatives. Express Data software division manager, Peter Stein, said better communications is the front row driver for take-up.

“The first thing that made SaaS popular is better communications networks,” he said. “When we used to use a modem, it wasn’t fast enough to drive proactive use of the Internet for software and software vendors were building fat clients sitting on the desktop.

“The beauty of the introduction of the Internet is we have a tool to deliver content. If we can write in that tool in common when getting out to market, we are able to leverage the experience and technology of pioneers in Australia and around the world, who have already gone through the pain and created good tools to market.”

Stein claimed the hard work leading up to SaaS’ availability was done by ASP pioneers in Australia including Telstra, WebCentral, Hostworks, smaller ISPs and ISVs.

“In hardware and software, people are treating the market during the global financial crisis as playing to this arena and clients are looking at how to manage costs,” Stein said.

He cited non-core business systems, such as email and CRM networks, as a key area of SaaS growth.

Evolution

Microsoft director developer of platform evangelism software, Gianpaolo Carraro, said SaaS evolved out of 10 years of the Internet and cloud computing. But he argued it is simply a different way of delivering software and combining features and customer operations to the end-user. “It is more evolutionary than revolutionary and a culmination of the past 10 years,” he said. “In some respects, those who outsourced or used ASPs in the past were in the same business.

“But with the maturity of market, it is becoming the most successful way and opportunity for a buyer to tap into economies of scale. When running your own software, you actually pay for the operation for yourself, and only you, but if it is run by a service provider you can divide the number of seats into the total cost of ownership.

“This is generally lower than running it yourself but the level of control is also lower and you have trade off costs versus control. Microsoft strongly believes in the hybrid model because you can’t always have cost versus control and whether you want software access for economies of scale.”


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