The development of web based applications has decoupled the user interface from the business layer as well as its software and hardware. As a result, a user working at a personal computer (or a smart phone) with a web browser can access a variety of business applications for the cost of the Internet connection and the subscription to the service.

The number of companies embracing the SaaS model has grown steadily, especially in the last couple of years, with small companies leading the charge. The SaaS applications that most companies are using are messaging (email, instant messaging and calendar), marketing, project management, time and billing, accounting / financial, customer relationship management, inventory management and payroll.

By purchasing a software service the company has no up front acquisition costs, no hardware or software to buy, and no support staff to hire and train. The cost of acquisition is reduced to the cost of training employees on the application and converting existing data. The low acquisition cost of software services makes the access to those services affordable to a broader range of companies. This affordability gives small companies the opportunity to use the same feature rich software solutions as those of larger companies. Going into details the pros are:

• Lower total cost of ownership (TCO). Hosted software carries a set price per user per month
• Financial predictability. It is much easier for a company to predict monthly IT expenses in a subscription based model then on a licensed application model.
• Lack of over provisioning or under provisioning of the IT infrastructure needed to run in house the licensed application
• Scalability. Hosted offerings are designed to scale seamlessly for large numbers of simultaneous users. As such, they are able to easily maintain performance levels and up time as your company grows and the volume of data expands over time
• Frequent upgrades. Updates are made frequently and for the company effortlessly. Because the software is delivered over the Internet, SaaS providers have greater flexibility in upgrading applications and rolling out changes to customers.
• Accessibility. Hosted software can be accessed from any web browser around the world. Users in different countries can access the same information in real time without the delay of synchronizing changes as is the case with a client server on premise solution.

Before a small company decides to select a hosted application it should have a sense of the limitations also. Yes, there are limitations, but if the model is used correctly, the limitations will be very small compared with the benefits. Using a software service prompts several concerns about integration. The chief concern is data security. This stems from an uneasiness people still have about sending confidential data across the Internet, though this concern is starting to wane. The other concerns surrounding software services are : system security, backup and recovery, and disaster recovery. In addition to these concerns, a company looking at a software service should also ask: ” What would I do if the service provider went out of business? Will I be able to retrieve my data, and how long will it take me to get data back up and into a new system where I can access it ? ” The software service is providing both hardware and hosting, s the loss of the provider means the loss of both services. This creates a single point of failure, a sizable risk. Also accessibility can also be a Con if one does not have access to the Internet.

In the last part of this piece I will try to describe a SaaS implementation process with all the steps involved.
Let’s stard with planning and design. The first order of business is to evaluate the features offered by each SaaS provider. Once you have a SaaS application pilot running you should have a GAP analysis which should compare the company’s existing needs to the functionality of the application. The analysis may reveal limitations that have to be made up by licensing one or more additional applications from the provider, or building custom code.

Next comes the analysis of the service level and license agreements. The SLA discussion will include up time guarantees, penalties if those guarantees aren’t met and the mechanism used to measure up time. You should realize that the smaller you are, the smaller your negotiation power is in relation to a big SaaS provider.

Next you should try to get information related to the security of the provider’s data center and the application servers that reside there. Whether your SaaS provider runs its own data center, or leases it from a managed hosting provider, the facility should have strong physical and logical access controls. You should ask if the provider engages in regular third-party audits of its apps, including web app vulnerability scanning and manual penetration testing. You should also be aware that most of the time you will get a “No Comment” as an answer to this question.

If you are happy so far, the next step in the implementation is existing data migration to the SaaS provider. At this stage if the provider really wants you as a client, it should do all the necessary steps to help you.
At this stage you should be a reasonably happy user of the SaaS application of your choice.

While I do not consider software services appropriate for all of a company’s application software needs, they can fill many of those needs.