Another view of Software as a Service (SaaS)
The problem of using “Commercial Off The Shelves’ (COTS) software is it is very expensive. In the beginning, company has to pay lot of money to buy COTS applications and more money to “customize” it to fit the company’s process. After that, company has to pay consultants for training so their people to use it appropriately. Then there are extra infrastructure that company has to install to run the COTS and pay ongoing maintenance fees to keep the systems operate smoothly. Many companies found out that using COTS instead of develop software in-house is NOT simple and MAY NOT save money as advertised by vendors.
Another alternative is to use “Software as a Service” (SaaS) model where company does not buy the software but “RENT” it from vendors. SaaS is also known as “On-demand software” or “Cloud computing”. Basically, SaaS is software applications developed and hosted by vendors, which the company accesses over the Internet. Unlike COTS applications that company install on their own systems, SaaS vendors own the software and runs it on their systems. The company can save money on buying and installing because they only RENT it. Most SaaS vendors offer basic software applications for all customers, these basic features CAN NOT be customized to keep it standardized. Any extra functionality to be added based on customer’s requests will be charged extra. This approach gives SaaS vendors the benefit of keeping things under control and cost-effective. It also make upgrading new versions of software easier and better quality than “Customized” COTS. The real benefit is company only pays a monthly fee per user for the software and do NOT have to buy additional hardware or infrastructure because everything is run on SaaS vendor’s information systems. It also takes less time to implement because company do not have to install software on every user’s computer but only access to SaaS vendor systems via the internet. Upgrades of software is easier because it is SaaS vendor must do all upgrades so company is always using the most recent version of the software.
However, many companies still have concerns about keeping their data in SaaS vendor’s information systems as they have no direct control over those systems. If the SaaS vendor goes out of business, many companies will be left without access to their data. If hackers can get into SaaS systems, they can do a lot of damages to customer’s business. Of course, SaaS vendors work hard to address concerns about security, they have implemented several security measures, including firewalls, encryption techniques, socket security features, intrusion-detection systems and other protections on their systems.
SaaS has its advantages but also disadvantages so Information Systems Manager must figure out what company needs and what SaaS vendors can provide. It is also very important to select SaaS vendor by consider the vendor’s financial stability, reputation, market position, quality, scalability, reliability, security, price and functionality of its product. Because software is a “service”, Information System Manager’s role must also change from managing software development to managing services. This change requires different approach in the way universities educate students, especially in Information Systems area. Unfortunately, many universities are slow to change so today many are still focusing on teaching infrastructure management or software development management instead of service management.
In general, SaaS work well with transactional, regular business processes such as sales, marketing, customer relations and employee management because these processes are simple, standard, and not highly dependent on other business functions. SaaS also works well in new company that has no existing systems that it has to integrate. However, SaaS does NOT work well with any specific applications that require a lot of customize, modify and integrate with existing systems, such as ERP, Business Intelligence, or special functions. These changes requires a lot of efforts and increase complexity, actually many SaaS vendors refuse to do any customization or major changes. A knowledgeable Information System Managers would know about this and help make the right decision for the company. Because of their training in service management, they understand how to balance different viewpoints such as business needs, quality solution, schedule and costs. They understand that the more company needs to integrate their systems with SaaS applications, the longer the implementation will take, the more difficult it becomes and the higher costs it will be.
Software as a Services (SaaS) has variations and many names. Some call it “On Demand software”, other call it “Cloud Computing” but the good thing is that most SaaS applications are pretty well designed for interoperability and quality. Because vendors have to create software that many different companies can use, they do focus more on the architect and design of the data exchanges and system interfaces and make integration easier. However when implement SaaS in a company, it really depends on the skills of the Information System Manager who manage the services because SaaS or Cloud Computing requires a different organization structure, different roles and responsibilities than the traditional structure.
A good Information Systems Manager is essential when company implement SaaS because he has to deal with the required service levels, the availability, financial viability, security and all the necessary infrastructure capacity of the service that SaaS vendors provide to the company. Managing service is different from managing software development. In this highly competition industry, information systems must demonstrate its value to the business by ensure that the service acquired will reduce operating costs, improve customer satisfaction, improve productivity and achieve strong security control.
Today, the industry is being “hyped” by so many SaaS advertises, many executives are asking about things like “cloud computing” or “Software on Demand” but without knowledgeable and skills Information systems managers who are trained in service management, the implementation of SaaS may NOT be as successful as expected.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
