Software as a Service, or SaaS, is a delivery model where software is accessed, typically through the cloud via a browser, by those who have subscribed to a service. The SaaS model different from the traditional software distribution model. Traditionally, software was purchased, and the user or business owns a copy to a license. SaaS is often equated with Cloud Computing.
Let’s explore the traditional model more closely.
The Traditional Software Model Components
1. Equipment – In the traditional model, once you have purchased the software, you will need several things to use that software. First, you will need hardware – which is where the software will live. Next, you’ll need to take steps to maintain that hardware – such as reliable electricity, network access, security, and cooling mechanisms. You will also need to maintain the equipment, and plan for its repair or replacement when it breaks down.
2. Operating System – The Operating System (OS), is where the application software will live. It runs on the equipment. Today, this is generally either a Microsoft, Linux, or a MAC OS. The OS will need to be maintained – viruses, disk space, upgrades – are all common concerns, and take time and labor energy to address appropriately.
3. The Application Software – This business application software too requires maintenance. It first needs to be installed, configured, and backed up appropriately, as well as made available to those in the business. You will need to answer questions about where people need access to the software. Will it need to be accessed outside the office? If so, what are the security concerns when you are using the software remotely? What steps will be taken to secure the software?
4. Upgrades – Software makers enhance their software over time inviting you to upgrade your existing application. These upgrades demand that you be mindful of the capacity (labor and computing resources) you have for completing those upgrades. Upgrades can be disruptive to the business as it can force you to change business practices; worse, it can break causing an unplanned business disruption.
These are just some of the components – and in my mind, represent the potential downsides – of the traditional software model. Let’s now take a look at the SaaS model.
The SaaS – Cloud Model: The Difference
In the SaaS model, all of the traditional concerns noted above are taken care of by the company providing the service. These concerns are still present, but unlike in the traditional software model, these concerns are now the responsibility of the company that is providing the service. They will specialize in making sure that their software is available, is backed up, is methodically upgraded, runs well, and is secure. You, the customer, along with other customers, pay one price for the use of the software; one instance of the system among many customers generate good economies of scale. In contrast to you hiring and managing an IT department, it is safe to say that a well run SaaS service company will have access to better talent and will develop better practices because this will be one of their core competencies.
I have one client that is suffering from all the traditional concerns note above. Their equipment is past its useful life and is due for replacement. The business folks do not really care about those traditional concerns because there is nothing competitive about being really good at it. At best, if they reinvest in upgrading their equipment and related systems, they will just have reliable service which is considered status quo — nothing competitive. The benefit of the SaaS model is that these traditional costs and concerns can be eliminated (or dramatically reduced in cost). In turn, the savings can be used to benefit the customer and further business growth. Many IT functions can now go away.
The best SaaS software is accessed using your browser – which means there is no installation. There are many benefits of the Cloud, and once companies are willing to trust others with their information, they will be able to reap the benefits of the Cloud environment. The good SaaS analogy is the way that we purchase electricity. We do not purchase our own generators, but we still need electricity. We happily pay a utility company that houses generators to provide us electricity, and we in turn share the cost of those generators, rather than having to acquire, install and maintain our own. If you are really nervous about reliable electricity delivery, you buy and maintain a generator — and you hire the people to maintain it; and you get to have all the costs of doing so. You can assess for yourself if you trust others to reliably deliver service as promised against the cost of doing it yourself.
The NetSuite Difference
Not all SaaS products are made alike; even if they are browser based. NetSuite does have a significant – and valuable – difference that sets it apart from other SaaS products. Most Saas simply provide a service. But that service is not adaptable or customizable. The service may do what it offers, buy you must either accept its capacities and limitations.
NetSuite differs because it allows for rich capacities for producing customizations and extensions of the native capacities of the NetSuite system. Check out my article about NetSuite’s SuiteCloud. NetSuite has the capacity to adapt to your business, and you can even find applications (apps) that other programmers have developed that are provided by NetSuite through SuiteCloud.
Copyright © Marty Zigman 2011
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Marty Zigman
Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.
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