Software as a service. The words are on everyone's lips. The pages of software industry publications are full of articles about software as a service (SaaS)—articles that use words like "revolution" and "horizon" (as in, "on the…"). Everyone knows (or thinks they know) what it is, roughly, and everyone knows it's going to be big. Yet few people would say they can really define it, and even fewer know how to build it.
Software as a Service (SaaS) is proving to have great potential to impact our lives in almost every way. A small company in India that has now immediate access to its employee across the globe by porting their human resource information on PeoplePower services. Consider a mid-size company that, due to the cost of the software license and required infrastructure, could never afford a true Human Resource Information Management automation tool, but now thanks to PeoplePower has a best-of-breed HRMS on per user per month basis, with no upfront cost, which means:

• The software is paid for as it is used;
• The consumer has no software, hardware, or infrastructure to purchase, install, or maintain;
• Apart from a personal computer and an Internet connection, all parts of the solution are provided by the software vendor.

These critical differences between the SaaS model and the traditional perpetual license model are driving the adoption of SaaS. In the traditional model of software delivery, the customer acquires a perpetual license and assumes responsibility for managing the software. There is a high upfront cost associated with the purchase of the license, as well as the burden of implementation and ongoing maintenance. ROI is often delayed considerably, and, due to the rapid pace of technological change, expensive software solutions can quickly become obsolete.

In the SaaS scenario, a software provider is responsible for its availability (maintenance, scalability, disaster recovery, etc.). That’s what the companies pay for. SaaS eliminates the problems associated with the perpetual license model. By offering significant advantages to both users and software developers, SaaS is breathing new life into the software industry. SaaS stimulates growth and innovation and creates new opportunities for selling and using software.

 

Traditional Approach	Software-as-a-Service Approach
You pay for the complete software package.	You pay only for the capabilities you use.
You pay the entire costs upfront when you acquire the application.	You pay the monthly subscription price.
You are responsible for installing and setting up the application.	The application is installed for you at the remote hosting site.  Setup is performed by the vendor or local support team.
You are responsible for backing up your data and the application and for making sure that a copy of the backup is in a safe offsite location.	The data and the application are automatically backed up on a regular (at least daily) basis at the secure hosting site.
Technical support is generally available only for an additional payment to the vendor	Technical support is included in the subscription price.
You have to purchase and install any upgrades to insure that the application is applicable to your current needs.	Upgrades are included in the subscription price and are installed by the provider.
As your business grows you have to purchase and install additional servers to support the growth.	Growth is handled automatically by the provider. You only provide your additional staff and their browser based desktop system.

• Lower Cost of Ownership - Because the software is paid for as it is consumed, the customer does not have to pay a large upfront cost for a software license. Additionally, since no hardware infrastructure is required, the user spends less on hardware, maintenance, and administration. This means that customers now have access to applications they could never afford in the perpetual license model. Furthermore, SaaS makes it possible for customers to immediately recognize value from their software purchases.

• Focus on Core Competency – The SaaS model frees the customer from the responsibility of installing and maintaining the software, which means that the customer no longer has to devote internal IT resources to making sure that their applications work properly. In addition to saving on costs, this allows the customer to remain focused on their core competency and utilize resources in more strategic areas.

• Access Anywhere – Users can use their applications and access their data anywhere they have an Internet connection and a personal computer. They do not have to be at their office or access the corporate network through a VPN or other method in order to use their applications. This enhances the customer experience of the software and makes it easier for users to get work done. In addition, users can take immediate advantage of the features and functionality of an application simply by launching a browser. There are no lengthy deployments to administer.

• Freedom to Choose – The pay-as-you-go nature of SaaS enables greater flexibility in terms of technology choices. It is now easier for users to select applications they wish to use and to stop using those that no longer meet their needs. Customers can avoid accumulating “shelf ware” and make more efficient use of their applications. Ultimately, this freedom leads to better software applications. In order to retain business, vendors must be receptive to customer needs and wants.

• New Application Types – Since the barrier to use the software for the first time is low, it is now feasible to develop applications that may have an occasional use model. This allows for a highly collaborative environment where some users may use the software rarely, but are important to the overall experience. This would be impossible in the perpetual license model. If an upfront cost were required the number of participants would be much smaller.

• Faster Product Cycles – Because of the development and testing processes utilized in SaaS, product releases are much more frequent, but contain fewer new features than the typical releases in the perpetual license model. This new process gets bug fixes out faster and allows users to digest new features in smaller bites, which ultimately makes the users more productive than they were under the previous model. Additionally, it is not necessary for the customer to continually upgrade the software. Each time the user accesses the software, it is the “latest and greatest” version that’s available.

• Improved Customer Relationships – SaaS contributes to improved relationships between vendors and customers. In the traditional model of software delivery, vendors are less accountable for the performance of their software. Once the software is sold, it is largely up to the customer to make it work. The SaaS model creates a more symbiotic relationship between vendors and customers and provides vendors with greater opportunities to please their customers.
  

As stated by industry analyst firm IDC, “The software industry has embraced SaaS; traditional software goliaths are transforming into SaaS players and emerging SaaS-focused companies are entering the marketplace.” Most new software developers will choose to develop exclusively for the SaaS model. Companies currently selling a perpetual license product will probably choose to continue to offer the perpetual license product along side a SaaS offering and, over time, phase out the perpetual license product. This is a profound shift for the software industry. As customer demand for applications delivered via the SaaS model continues to grow, vendors will find opportunities to create and sell products, resulting in a “win-win” for both sides.

PeoplePower, is solely focused on providing the operational infrastructure and ongoing services that enable us to deliver and maintain the highest quality Software as a Service (SaaS) solutions. By choosing PeoplePower as a SaaS partner, the organization is free from infrastructure management and can focus on improving its core business domain and finding new customers. PeoplePower's highly advance technology infrastructure enables organizations to deploy SaaS quickly, effortlessly, and without risk. PeoplePower is the only company to offer complete HRMS as pay per use, our per unit pricing model which allows companies to begin with a minimum commitment, and expenses scale only as revenue increases. For more information, schedule a meeting with our representative.