The phenomenon ofsoftware as a service (SaaS)has
changed the way organisations access their applications, as more
and more users deploy hosted software delivered direct to a web
browser.
The range of applications and services available over public and
private networks has also mushroomed as networks have grown more
robust and reliable.
As a result,
SaaS is being used for many types of applications. E-mail is
probably the biggest growth area analyst Gartner even believes that
e-mail is leading the way for the mainstream adoption of SaaS,
which it views as coming under the banner of
cloud computing.
Gartner has predicted that the percentage of commercial
mailboxes using a SaaS model will grow from 1% of enterprise seats
in 2007 to 20% in 2012. The expansion will be driven by falling
prices and new e-mail service providers, which will include
established software suppliers.
Matthew Cain, research vice-president at Gartner, says, "Events
during the past year have created the conditions for the rapid
growth of the cloud delivery model for enterprise e-mail, with
companies such as Google, Yahoo, Dell and Microsoft all making
major investments in cloud computing."
Webmail
Analyst Bob Tarzey, service director at Quocirca, says that the
e-mail management sector contains a host of specialists providing
hosted Microsoft Exchange services as well as
webmail offerings such as Google Mail.
"Webmail is increasingly seen as a viable option for business,
and Google's seriousness in this area can be gauged through its
acquisition of Postini last year, one of the main SaaS-based e-mail
security vendors," he says.
Tarzey adds that the other big SaaS-based e-mail security
vendors are MessageLabs and FrontBridge (now owned by
Microsoft).
But Cain predicts that traditional e-mail SaaS suppliers will
come under tremendous price pressure from "mega-scale vendors",
which will mean more end-users with under 1,000 seats gaining from
the lower-cost cloud approach.
When it comes to enterprise security, organisations can now put
together whole security stacks based on SaaS.
For example, they could use managed virtual private network
(VPN) services from a provider such as Asavie or a telco like BT,
Thus or Orange. Web and e-mail filtering and e-mail archiving can
come from the likes of E-mail Systems or ScanSafe intrusion
detection and vulnerability testing from Qualys or Plynt and laptop
disk encryption from the likes of AlertSec. A managed, strong
two-factor authentication service is available from suppliers such
as Signify, whose service is based on RSA's SecurID.
Helpdesk and backup are also popular SaaS applications, and many
organisations are even using hosted supply chain, accounting and
business management software - areas once dominated by monolithic
in-house applications.
SaaS penetrates
Craig Roth, vice-president and service director at Burton Group,
recently carried out a study of 318 North American SaaS users
across a range of industries.
He says that improvements in rich internet applications, and
faster and more ubiquitous internet connections, have allowed SaaS
to be applied to "practically any application category".
Roth notes that Salesforce.com, one of the pioneering SaaS
suppliers, has proved the success of the SaaS model with highly
complex, customised systems that can deal with sensitive data.
Applications such as Google Apps have also demonstrated that
highly interactive applications, such as word processors and
spreadsheets, can be delivered through SaaS.
Roth says, "Web conferencing is the most common SaaS in
enterprise use, which is not surprising since it was historically
rooted in a SaaS model and involves less information security risk
and integration.
"The human resources SaaS category [HR, benefits, payroll, and
recruitment] is also popular for enterprise-wide usage. SaaS e-mail
is more likely to enjoy enterprise use in small organisations.
"I believe that ERP, blogs, wikis, e-commerce, and enterprise
content management are set to double SaaS usage in the next two
years. In each of these categories about as many respondents
indicated they were likely to adopt them as SaaS in the next 24
months as were already currently using SaaS."
Web conferencing
Other areas where SaaS has taken hold include web conferencing,
with services such as WebEx (now part of Cisco), Microsoft Live
Meeting and Citrix Online GoToMeeting.
Citrix Online also
has system management tools such as GoToMy PC and GoToAssist, which
are all 100% SaaS, says Tarzey.
Manchester Council is a GoToAssist user, and Vince Slatford, the
council's management information systems support manager, says it
has cut the cost of providing IT support to 170 schools and
learning centres by 60%. The council's 15-strong support team can
maintain and manage IT systems via a secure internet connection,
which saves more than 70 hours of staff travel time per month.
However, Tarzy says that in Europe Citrix is being challenged by
Europe-based SaaS supplier
NTR Global.
The company's NTR Support and NTR Admin are also 100% SaaS system
management tools.
"The big advantage here is the ease of remote management but
also the creation of communities that pool information for solving
problems," he says.
Supply chain
Supply chain management is a sweet spot for SaaS, with services
from online service pure-plays such as WeSupply and Ariba. GXS and
Kewill are also moving into the supply chain Saas market.
Software supplier Oilspace provides applications to oil giant
TNK-BP. It says there is a busy and growing market for SaaS
applications in the oil and energy industries, specifically in the
supply chain, business management and trade and risk management
parts of the business.
According to Oilspace, systems such as trade and risk management
underpin the oil industry but have traditionally been complex and
costly, and have not worked well in a distributed environment.
However, a new generation of SaaS-based dealing applications is
emerging, which offers the lower costs and flexibility of online
hosted software.
One such application is Oilspace's web-based TradeFlo system,
which carries out back-end intelligence, data processing and
storage at a protected central site, and gives authorised traders
and managers secure access through a desktop or mobile browser.
Among companies to have adopted TradeFlo are London-based
trading house Bronwen Energy and international trader Ovlas
Trading.
Testing
Another growing SaaS sweet spot is application testing, says
Bola Rotibi, principal analyst at Macehiter Ward-Dutton.
She says the attraction of SaaS is twofold: applications come
from lower-cost cloud computing (which offers internet-based SaaS)
and can be harnessed to powerful and time-saving grid computing
(which uses multiple connected servers). Organisations can
therefore effectively ramp up their processing capabilities by
harnessing additional IT resources over the web on demand.
"Online development services offer organisations the ability to
create virtual servers that can be used for additional processing
power to develop and deploy a software stack," says Rotibi. "They
can then run and test their applications on this for whatever
purpose, and after prototyping them, bring them back on the
premises."
Rotibi adds that users are getting more comfortable and
confident with the technology, and have fewer fears about security
and losing their data to a third party. "You just have to look at
Salesforce signing the megadeal with Merrill Lynch last year to see
that."
One application developed using the cloud computing model - and
which is also available itself as SaaS - could point towards the
future of SaaS.
The software, from Coda, is one of the first SaaS accounting
systems built on Salesforce.com's Platform as a Service (Force.com)
application framework. The online accounting service integrates
with Salesforce.com and Google Apps, and can be deployed to desktop
and mobile clients.
Even more interestingly, the online accounting suite was
developed by a team of nine engineers in just six months, which is
two years earlier than planned.
Coda attributes the speed of development to its use of the cloud
computing model rather than the traditional onsite model.
The Google factor
It is hard to talk about Saas and cloud computing without
looking at Google. Google has attracted many enterprises and
individuals to its e-mail and search services, but its ambitions go
much further.
Google Apps Premier Edition
is a set of SaaS services for enterprises that offers
communication, collaboration and office productivity tools over the
web.
The Telegraph Media Group recently signed a deal to implement
Google Apps as a key part of its plan to move towards cloud
computing. The move will let Telegraph journalists and commercial
staff access e-mail, documents, diaries and other information from
anywhere in the world and on any device with an internet
connection.
Another user, construction and engineering company Taylor
Woodrow, recently transferred all 1,800 employees to Google
Apps.
The company set up a Google Site to host online training
documentation and videos for employees to familiarise themselves
with Google Apps.
The applications Taylor Woodrow have deployed include Google
Mail, Google Docs (documents, spreadsheets and presentations),
Google Calendar, Google Sites and Google Talk. The company also
uses Google Message Discovery for e-mail security, content policy
management, discovery, and archiving services. It has been using
the Google Search Appliance for over two years, to manage search
and retrieve documents on its intranet.
Taylor Woodrow says it moved to Google Apps because it offered
flexible and mobile communications. The hosted nature of the
technology, and the inclusion of phone, e-mail and web support in
the package has also saved the company around £1m.
As well as cutting the cost of running front-office
applications, SaaS can also cut the cost of deploying back-office
and supply chain applications.
It is not clear where Google will go next. What does seem very
likely, however, is that IT directors will be making more use of
Saas, particularly for hosting e-mail and e-mail/web security.
Beyond these killer application areas, the take-up will depend on
suppliers offering innovative services that businesses are
unwilling to build themselves.
Coda 2go development blog >>
How to roll out SaaS >>
What's to stop you going SaaS? >>
Business takes lead in SaaS deployments >>