Before discussing Software as a Service (SaaS), we really need to understand the roots of the term and technology. Recognizing that SaaS stems from the older application service provider (ASP) model, I’d like to distinguish the differences between the two.
Application Service Providers (ASP’s) of the 1990’s pioneered the industry of “hosting” hardware, (often) implementing software, and maintaining all network infrastructure for delivery of an application up to the point of the corporate firewall. The large benefits coming from ASP models were the offloading of IT functions and disaster recovery processes guaranteed within service level agreements (SLA’s). Offloading IT functions was increasingly desirable in areas like HR which were seen outside of the core corporate business competencies, and therefore deserved less attention. Often an HR department would operate systems without necessary budgets, or be “last in line” for IT support time. SLA’s provided HR departments with some comfort that they would finally get the technical attention they deserved. Unfortunately, these SLA’s were all too necessary ans systems went down often and connectivity speed over the internet was variable.
So what’s so different about SaaS?
- First of all, application architecture has been changing. With truly thin client, low bandwidth internet applications, benchmark screen download times have steadily decreased. Enough of us remember waiting to download screens through a Citrix connection to appreciate one or two second screen loads.
- Along with changes to web native coding, applications have been re-architected to support multi-tenant installations. This has also translated into data center changes. Multi tenet applications allow a server to host multiple organizations, and streamline upgrade support. Rather than housing multiple versions of software on many operating systems, which sit on many servers, SaaS vendors are able to secure corporate environments while simplifying IT maintenance.
- Service has improved. I’m not talking about IT hosting and a vendor’s ability to upgrade your software. HR SaaS vendors are blurring the lines between HRIT support and HR business partners. HR software is so specialized and complex today that the SaaS vendors must provide some consultative services to augment the application delivery. Process and workflow are now included in many SaaS offerings.
- Lastly, SaaS should also deliver economies of scale not seen with ASP vendors. With maturity in the industry and acceptance by corporate buyers, increasing volumes lower overall fixed costs to a point where SaaS often delivers a lower overall TCO than doing it yourself.
What else should you know about SaaS?
- Customization may be limited. One to many (multi tenant) applications may eliminate or minimize the ability to customize an application to your ideal requirements. The good thing is today’s applications have become so configurable, what was a customization yesterday is configuration today.
- Measure TCO carefully. Today’s SaaS applications should cost no more than buying, implementing, and maintaining the software on your own.
- Understand internet security. If this is your first foray into SaaS or ASP, you’ll want to understand who packets of information are bundled and encrypted before they are sent across the open internet. Get your corporate information security people involved. If you don’t, they may just shut you down later.
- Understand your service level agreements (SLA’s). It’s possible you have a top notch, responsive IT department who jump at your every beck and call. Know your current benchmark response times for service and what you’ll be getting into when you outsource.
- Know what access to the data you’ll have. If you currently have your data on a server within arm’s reach, you can probably use whatever reporting tool you want. Moving the database to a server in Asia might limit your data access options depending on your vendor.
- You’ll may have some financial data in your SaaS application. Benefits and payroll are the biggest culprits, so get your Sarbanes Oxley compliance officer involved with checking the vendor out.