Software as a Service (SaaS)A look at the migration of applications to the webJeremy DeyoINFO 658 • Fall 2008 • December 4, 2008Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 1Table of ContentsIntroduction! 3Overview! 4What is SaaS?! 4Adoption! 4Implementations of SaaS! 6Salesforce.com! 6MobileMe! 6Google Apps! 7Microsoft Office Web! 7Amazon EC2 & Microsoft Windows Azure! 7Photoshop.com! 8NetSuite! 8Advantages! 9Pay-as-you-go Elastic Pricing Model! 9Superior Network Infrastructure! 9Intellectual Property! 9Software Maintenance! 10Mobile Computing! 10Disadvantages! 11Long-term Sticker Shock! 11Lack of IT Involvement! 11Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 1SaaS Maturity Market! 11Integration Problems! 12Vendor Lock-in! 12Software Changes/Enhancements! 13Carr’s Perspective! 14Security Implications! 15Open Source vs. Proprietary! 16Conclusion! 17References! 18Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 2IntroductionSoftware has traditionally been a packaged good that consumers and businesses purchase and install on local computers. Over the past several years, however, we are seeing a gradual shift in how software is delivered to customers. Rather than building applications that run locally on a computer, software developers are building applications that run remotely on multiple servers, which can then be accessed from any computer with an Internet connection. This shift in strategy has many implications for both new and existing software companies, as well as for the open source community. With major players such as Microsoft, Apple, Google, and Amazon all moving towards the “cloud”, we are without a doubt moving into a different era of computing.Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 3OverviewWhat is SaaS?SaaS stands for “Software as a Service”, and it essentially refers to software that is hosted on servers and is provided as a service. Some initial uses for SaaS included customer relationship management offerings, content management systems, video conferencing, and e-mail communication systems. SaaS applications are provided over the web, which means they can be accessed from any computer without any special software installed. In fact, many applications are designed to run through a standard web browser. When updates to a SaaS application need to be installed, they are simply installed on the server, which immediately ensures that all users are running the latest version. Unlike traditional software applications that require an upfront purchase, SaaS applications typically offer subscription-based pricing and are usually licensed on a per-user basis.AdoptionMany of the early adopters of SaaS were small businesses, primarily due to the low upfront costs and simplistic integration. Larger enterprises, however, have taken a somewhat more cautious approach to implementing SaaS solutions within their organization, particularly for mission-critical applications. Forrester Research conducted a survey in 2006 and 2007 to determine the SaaS adoption rate in enterprises. The survey was given to IT decision-makers in enterprises across North America and Europe. In 2006 they received 667 responses, and 450 responses in 2007. According to the 1,017 respondents, the most popular uses of SaaS included human resource offerings, customer relationship management, and collaboration tools. The graph on the following page shows a gradual increase in the adoption of SaaS offerings among large enterprises between 2006 and 2007. More recently, research from Gartner indicated that worldwide SaaS revenue was up 27 percent, reaching an all-time high of $6.4 billion. Gartner also predicted that sales revenue would exceed $14.8 billion by 2012 (Wailgum, 2008).Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 4How interested are you in adopting software as a service?Source: Forrester Research Inc., Cambridge, Mass.Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 546%12%41%2006Interested or planning to pilotAlready using or planning to pilotNot at all interested46%16%37%2007Implementations of SaaSThe following are some of the more popular implementations of SaaS:Salesforce.comPerhaps one of the earliest implementations of SaaS is SalesForce.com. Initially launched in 1999, SalesForce.com has become a major player in the market for customer relationship management (CRM) software services. The company was founded by former Oracle executive Marc Benioff, and has consistently grown year-after-year into a billion dollar company. SalesForce.com has over 47,700 customers scattered around the globe that use their CRM services. In 2007, the company launched a new platform called force.com. Force.com is a “platform as a service”, which allows developers to build plugins for their CRM solutions. The plug-ins run on the force.com platform and are hosted by salesforce.com. In conjunction with their force.com platform, the company also launched an AppExchange. The AppExchange serves as an online marketplace where developers can sell their plug-ins for use in other CRM applications.MobileMeApple Inc. originally launched iTools in 2000, which later became .Mac in 2002 and ultimately MobileMe in 2008. MobileMe is Apple’s suite of online applications for iPhone, iPod touch, Mac and PC users. Customers can sync their e-mail, contacts, calendars, photos, etc. with the MobileMe online service using their computer or mobile device. Many of their online applications make use of advanced AJAX technologies, which allows for the online services to appear more application-like than traditional websites. Users can, for instance, drag and drop messages from their inbox to other folders just as they do with their traditional mail application. While iTools and .Mac served primarily as an extension for Apple’s Mac operating system, MobileMe stands by itself as a true SaaS offering.Jeremy Deyo • email: [email protected] • Virginia Commonwealth University! 6Google AppsIn 2004, Google launched an invitation-only e-mail service called Gmail. At the time of launch, there were already other free e-mail services available, such as Yahoo! Mail and Microsoft’s Hotmail. What set Gmail apart from the competition, however, was its simplistic interface and abundant storage. Expanding on the success of
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