SaaS - Software revolution or a warmed-over buzzword?


There are some "trends" in the industry that you sometimes can't seem to be able to escape. Visit any tech Web site or open any trade magazine, and there they are -- the latest alphabet soup of acronyms that are going to rescue your IT department and revolutionize your organization.

Among the most popular of these terms lately is SaaS. Just what does SaaS stand for and does it really represent a major change? Or is it yet another bit of market-speak?

What is SaaS?

SaaS stands for "Software as a Service." The idea behind SaaS is that you don't purchase servers and application software and run them in-house. Instead, you contract with a company with its own server farm, support staff, and software. Your users then access those applications across the Internet.

SaaS has the advantage of providing more robust software to small and medium-size businesses without forcing them to incur large investments in servers, staff, and application design and programming. Instead of facing large upfront costs, businesses pay for access to the applications on a steady monthly basis, much like an electric or water bill.

Although the term is newly popular, the concept has been around since the dot-com boom era when companies were trying to figure out how to exploit the power of the Internet in new ways. Around the turn of the century, the catchphrase for the concept was Hosted Applications. These were stored on and served up by ASPs, or Application Service Providers.

Hosted applications at the dawn of the twenty-first century initially grabbed a lot of press, but they never were very successful. At the time, the industry was too immature to support applications rich enough to be very useful.

Another problem was the performance of hosted applications. At the time, most people used dial-up modems to connect to the Internet. These connections were usually too slow to make the hosted applications useful. Higher-speed lines, such as T-1s, could remove the price advantaged offered.

With widespread broadband and AJAX, PHP, and other Web 2.0 technologies, the first two major objections have largely been answered. The final biggest problem people had with hosted applications still exists at some level. That has to do with security and disaster recovery. When you use a hosted solution, you're putting disaster recovery security in someone else's hands.

One of the oldest and most successful SaaS vendors has been Other vendors include Oracle, RightNow, and NetSuite. You can get a Saas equivalent for just about any boxed-software solution. Although CRM has been the most used SaaS solution, you can find SaaS vendors that support accounting, CAD, content management, supply chain, and so on.

SaaS resources

Keeping up with such a fast evolving area as SaaS can be difficult. You can find out more about SaaS at such places as:

SaaS information on TechRepublic includes:

The bottom line for IT leaders

The idea of SaaS isn't anything new. It's been around for some time, but technology is only now really catching up to the concept. Calling hosted applications SaaS is more than just putting lipstick on a pig. For some line of business applications, implementing a SaaS solution can save a lot of time and money.

If your business is considering a SaaS solution, make sure the vendor you're considering has a long track record and is financially sound. You don't want to entrust your data and mission-critical services to a company that may go belly up any minute. Check to see how their security policies measure up and what they do for disaster recovery. If possible, see if you can obtain some type of QoS agreement with them, ensuring that you have access to your data whenever and wherever you go. Work with your ISP to make sure that you can get enough reliable bandwidth to make the solution viable.

In the final analysis, check to see what you're spending on implementing and supporting your current applications. You may be surprised what a bargain you have in your current solution. Alternatively, you may find that having a steady bill over time is more cost-effective for your company.


From the customers' perspective, SaaS provides a lot of benefits. Lower, predictable TCO that reflects features, usage and number of users directly. Better security, reliability and delivery than most firms can do in house. And, most importantly, it makes enterprise applications available to smaller organizations that otherwise could not have access due to both cost and expertise. The down side is that first versions of SaaS products are generally less customizable and more difficult to integrate than dedicated deployments. The differences disappear quickly, however, as the SaaS product matures if it has a sustainable market. For the packaged software vendors, SaaS can completely change their organization. Software has to be rewritten as multi-tennant, no mean feat for most COTS applications. And the hosted application model, and the operatioonal maturity that implies, is a real stretch for most applications. But the benefits really make the effort worthwhile. No supporting dozens of versions of an application remotely in concert with customers' IT staffs. The sixty percent of the market that is too small to purchase a dedicated version can now not only afford your product, but can try it before they buy it. If you application or your company would benefit from these advantages, you'd be a fool not to start now. Your competitors are. And if you're in IT and not looking how to get on this train, you won't necessarily be left behind, but you will be missing an increasingly significant portion of the landscape.


software as a service doesn't mean hosted, necessarily; it's primarily a billing model. regardless, desktop software has held on because of it's obvious performance advantage. like ours, at


Aside from the billing model, there's also the attractiveness of a scaling model.


I have experience with a SaaS vendor (who will remain nameless) that oversold both their product and their staff capabilities. This particular product has promise but is, admittedly in its lowest cost offering, not in a useable form. At least it was priced to be tried before buying, but that makes it little more than a hosted eval copy.

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