Software as a service

Software as a service

SaaS has become a common delivery model for most business applications, including accounting, collaboration, customer relationship management (CRM), enterprise resource planning (ERP), invoicing, human resource management (HRM), content management (CM) and service desk management.SaaS has been incorporated into the strategy of all leading enterprise software companies.

According to a Gartner Group estimate,[4] SaaS sales in 2010 have reached $10B, and are projected to increase to $12.1b in 2011, up 20.7% from 2010. Gartner Group estimates that SaaS revenue will be more than double its 2010 numbers by 2015 and reach a projected $21.3b. Customer relationship management (CRM) continues to be the largest market for SaaS. SaaS revenue within the CRM market is forecast to reach $3.8b in 2011, up from $3.2b in 2010.

The term software as a service (SaaS) is considered to be part of the nomenclature of cloud computing, along with infrastructure as a service (IaaS) and platform as a service (PaaS).

Architecture

The vast majority of SaaS solutions are based on a multi-tenant architecture. With this model, a single version of the application, with a single configuration (hardware, network, operating system), is used for all customers ("tenants"). To support scalability, the application is installed on multiple machines (called horizontal scaling). In some cases, a second version of the application is set up to offer a select group of customers with access to pre-release versions of the applications (e.g., a beta version) for testing purposes. This is contrasted with traditional software, where multiple physical copies of the software—each potentially of a different version, with a potentially different configuration, and oftentimes customized—are installed across various customer sites.

While an exception rather the norm, some SaaS solutions do not use multi-tenancy, or use other mechanisms—such as virtualization—to cost-effectively manage a large number of customers in place of multi-tenancy. Whether multi-tenancy is a necessary component for software-as-a-service is a topic of controversy.

Characteristics

While not all software-as-a-service applications share all traits, the characteristics below are common among many SaaS applications:

Configuration and customization

SaaS applications similarly support what is traditionally known as application customization. In other words, like traditional enterprise software, a single customer can alter the set of configuration options (a.k.a., parameters) that affect its functionality and look-and-feel. Each customer may have its own settings (or: parameter values) for the configuration options. The application can be customized to the degree it was designed for based on a set of predefined configuration options.

Accelerated feature delivery

SaaS applications are often updated more frequently than traditional software,[11] in many cases on a weekly or monthly basis. This is enabled by several factors:

• The application is hosted centrally, so new releases can be put in place without requiring customers to physically install new software.
• The application only has a single configuration, making development testing faster.
• The application vendor has access to all customer data, expediting design and regression testing.
• The solution provider has access to user behavior within the application (usually via web analytics), making it easier to identify areas worthy of improvement.

Accelerated feature delivery is further enabled by agile software development methodologies. Such methodologies, which have evolved in the mid-1990s, provide a set of software development tools and practices to support frequent software releases.

Open integration protocols

Since SaaS applications cannot access a company's internal systems (databases or internal services), they predominantly offer integration protocols and application programming interfaces (APIs) that operate over a wide area network. Typically, these are protocols based on HTTP, REST, SOAP and JSON.

The ubiquity of SaaS applications and other Internet services and the standardization of their API technology has spawned development of mashups, which are lightweight applications that combine data, presentation and functionality from multiple services, creating a compound service. Mashups further differentiate SaaS applications from on-premises software as the latter cannot be easily integrated outside a company's firewall

Collaborative (and "social") functionality

Inspired by the success of online social networks and other so-called web 2.0 functionality, many SaaS applications offer features that let its users collaborate and share information.

For example, many project management applications delivered in the SaaS model offer—in addition to traditional project planning functionality—collaboration features letting users comment on tasks and plans and share documents within and outside an organization. Several other SaaS applications let users vote on and offer new feature ideas.

While some collaboration-related functionality is also integrated into on-premises software, (implicit or explicit) collaboration between users of different customers is only possible with centrally-hosted software.

Data escrow

Software as a service data escrow is the process of keeping a copy of critical software-as-a-service application data with an independent third party. Similar to source code escrow, where critical software source code is stored with an independent third party, SaaS data escrow is the same logic applied to data within a SaaS application. It allows companies to protect and insure all the data that resides within SaaS applications, protecting against data loss.

There are many and varied reasons for considering SaaS data escrow including concerns about vendor bankruptcy, unplanned service outages and potential data loss or corruption. Many businesses are also keen to ensure that they are complying with their own data governance standards or want improved reporting and business analytics against their SaaS data. A research conducted by Clearpace Software Ltd. into the growth of SaaS showed that 85 percent of the participants wanted to take a copy of their SaaS data. A third of these participants wanted a copy on a daily basis.

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