SaaS: a revolution in progress for clients … and software publishers
Having risen to prominence in the Internet era of the late 1990s, the concept of an ASP (Application Service Provider) has now almost entirely been replaced by the term ‘SaaS’ (Software as a Service), creating a degree of confusion among clients.
However, it would be a mistake to see this as a semantic or marketing dispute of the kind so beloved of the IT industry. An evolution of the traditional ASP model, SaaS actually represents a genuine revolution for clients and a complete paradigm shift for software publishers.
From ASP to SaaS:
With the advent of broadband Internet, ASP initially made it possible to share single-function applications remotely via mutualised servers, using an economic ‘rental’ model which flew in the face of the well-known licence acquisition model. However, the potential offered by hosting seemed insufficiently persuasive to clients concerned about security and confidentiality issues as well as facing restrictions of interoperability with internal applications. For this reason, the initial incarnation of ASP failed to produce the expected market explosion: according to IDC, ASP currently accounts for only a fraction over 20% of the French outsourced applications market.
However, as it has matured, ASP has reinvented itself as Software as a Service (SaaS), a service proposition offering genuine advantages to clients. Firstly, SaaS solutions are now capable of addressing one or more business processes in areas as diverse as CRM, ERP, security, storage and collaborative applications. They address wider functional requirements by providing native support for solutions from various providers. Secondly, SaaS offers extensive configuration options and credible solutions which enable outsourced applications to be incorporated into in-house software packages (via Web Services, for example). Lastly, in some cases, SaaS solutions offer additional services which add significant value from the client’s perspective: automatic reporting, alerts, online third-party application maintenance, etc.
SaaS: the reasons for its success
SaaS has now become a tangible reality within the enterprise space. In addition to the media success of Salesforce.com, the SaaS market now generates turnover of €122m in France (source: IDC) and $5.7bn worldwide in 2007 (source: Gartner) –in fact, the Gartner Group estimates that this market will double by 2011.
In addition to these macroeconomic indicators, we believe there are four reasons explaining the current and future success of SaaS:
The first of these stems from the sharp reduction in application deployment time. SaaS solutions can offer considerable time savings during the configuration phase (because of their prepackaged nature) and technical integration phase (provision of hardware and human resources for the installation of applications on company equipment). At Staff&Line, we have observed that when comparing like for like in terms of scope, rollout times can be reduced by eighty or even ninety percent. In addition, the SaaS model also lends itself to phased rollout (by functional module or process), producing quick wins which ensure successful project completion.
The second reason for the success of SaaS is linked to the extra value added by these solutions. At a time when many clients are concerned about the low rate of use of deployed applications, SaaS solutions enable these applications to be used to their maximum potential. An improved interface, a better balance between functional cover and ease of use, extended configuration options, improved security and reversibility; these are all differentiating factors offered by SaaS-type solutions. Furthermore, the publishers of SaaS solutions often offer additional functionalities which build on their own business specialities. This is particularly true in the case of functions for automatic reporting (KPI, dashboarding) or sending alerts, which enable the client to make better use of the data contained within applications without the need for costly investment.
Thirdly, the SaaS model gives clients better control over an application’s induced costs. It is known that the initial costs of acquisition and deployment rarely account for more than a third of the full cost (TCO, or Total Cost of Ownership) of an application over a period of five to seven years. Indeed, two-thirds of the overall sum derives from the costs of maintenance and later upgrades. The rental model offered by SaaS offers companies better control over hidden costs as it usually includes version upgrades and their induced costs. since version updates are transparent to the client, and support is facilitated from the point of view of the publisher, who else is better positioned to reproduce and fix problems by accessing the defective application online than the Saas provider.
Lastly, the SaaS model produces a stronger and more lasting involvement with the publisher in its relationship with the client. Having potentially previously been an “occasional supplier” with visibility at the sales stage, and maybe during implementation and maintenance, the publisher now becomes a service provider with a responsibility, bound by undertakings of quality, availability, security and product upgrades over time. It is encouraged in this virtuous approach by a new, more persistent and profitable business model which constitutes a better fit for what the client is actually looking for – a long-term partner-based relationship.
Staff&Line: a French SaaS pioneer
A French pioneer in outsourced applications in the IT Management sector (Service Management, IT Asset Management), Staff&Line launched the EasyVista.com service in 1998, providing companies with rental-based dynamic control panels offering data on the quality of their IT infrastructures. In 2004 Staff&Line launched EasyVista, a genuine IT ERP system, available in SaaS form. In the past 10 years, Staff&Line has provided services of this kind to several hundred clients of all sizes in Europe and the United States.
