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Software As A Service (Saas)

The document discusses Software as a Service (SaaS) and its financial considerations. SaaS is a software delivery model where software is hosted in the cloud and accessed via the internet. Key benefits include lower upfront costs, continuous updates, and no need to manage infrastructure. However, there are also concerns around data security, privacy and lack of offline access. The document then examines SaaS architecture and how applications need to be scalable, multi-tenant, and configurable. It also provides a case study on a company that rents software on an hourly, daily, weekly or monthly basis at lower costs than purchasing licenses outright.

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Aazam Khatri
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67 views

Software As A Service (Saas)

The document discusses Software as a Service (SaaS) and its financial considerations. SaaS is a software delivery model where software is hosted in the cloud and accessed via the internet. Key benefits include lower upfront costs, continuous updates, and no need to manage infrastructure. However, there are also concerns around data security, privacy and lack of offline access. The document then examines SaaS architecture and how applications need to be scalable, multi-tenant, and configurable. It also provides a case study on a company that rents software on an hourly, daily, weekly or monthly basis at lower costs than purchasing licenses outright.

Uploaded by

Aazam Khatri
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 18

Software as a Service

(SaaS)
Does it make Cents?

by
Brian Moore
Contents
 Brief Background information
 SaaS Architecture
 Financial Consideration
 Case Study
 Conclusion
 Q&A
Intro to SaaS - Definition
 Software as a service (SaaS) is a model
of software delivery where the software
company provides maintenance, daily
technical operation, and support for the
software provided to their client.
 It assumes the software is delivered over
the internet.
 Software delivered to home consumers,
small business, medium and large business
Intro to SaaS
 The web as a platform is the center point
 Web-browser acting as a thin-client for accessing
the software remotely across the internet.
 Network-based access to, and management of,
commercially available (i.e., not custom) software
 application delivery that typically is closer to a one-
to-many model (single instance, multi-tenant
architecture) than to a one-to-one model, including
architecture, pricing, partnering, and management
characteristics
SaaS - Pros
 Stay focused on business processes
 Change software to an Operating Expense instead of a
Capital Purchase, making better accounting and budgeting
sense.
 Create a consistent application environment for all users
 No concerns for cross platform support
 Easy Access
 Reduced piracy of your software
 Lower Cost
 For an affordable monthly subscription
 Implementation fees are significantly lower
 Continuous Technology Enhancements
SaaS - Cons
 Initial time needed for licensing and
agreements
 Trust, or the lack thereof, is the number one
factor blocking the adoption of software as a
service (SaaS).
 Centralized control
 Possible erosion of customer privacy
 Absence of disconnected use
SaaS Architecture
 Fueled by
 Bandwidth technologies
 The cost of a PC has been reduced significantly
with more powerful computing but the cost of
application software has not followed
 Timely and expensive setup and maintenance
costs
 Licensing issues for business are contributing
significantly to the use of illegal software and
piracy.
High-Level Architecture
 There are three key differentiators that separate a well-
designed SaaS application from a poorly designed one
 scalable
 multi-tenant-efficient
 configurable
 Scaling the application - maximizing
concurrency, and using application resources
more efficiently
 i.e. optimizing locking duration, statelessness, sharing
pooled resources such as threads and network
connections, caching reference data, and partitioning
large databases.
High-Level Architecture (con’t)
 Multi-tenancy – important architectural
shift from designing isolated, single-tenant
applications
 One application instance must be able to
accommodate users from multiple other companies at
the same time
 All transparent to any of the users.
 This requires an architecture that maximizes the
sharing of resources across tenants
 is still able to differentiate data belonging to different
customers.
High-Level Architecture (con’t)
 Configurable - a single application instance on a
single server has to accommodate users from
several different companies at once
 To customize the application for one customer will
change the application for other customers as well.
 Traditionally customizing an application would mean
code changes
 Each customer uses metadata to configure the way
the application appears and behaves for its users.
 Customers configuring applications must be simple
and easy without incurring extra development or
operation costs
Saas Financials
 4 ways software companies are pricing their products
 Open Source – free basic products but charge a fee for

the upgrade to the premium product (i.e. Apache, Linux,


etc)
 License software – main way its being done. Customer

like this way because they own the software as an asset


 Leased Software – deployed at customer site but leased

for a time period. Used in the days of the mainframe


 SaaS – subscription pricing. Like leasing is considered and

expense but upgrades and maintenance is free and


seamless
Saas Financials (con’t)
 Legal should be involved in the acquisition of mission-
critical SaaS software
 Companies are losing control of their data in the SaaS model
 Depending on the service provider for security and data access.
 Need to setup contractual relationship with the SaaS
provider
 Setup escrow account
 With conditions of being able to run application in house
 Ability to move data from current provider to new location
 Also Service Level Agreements (SLAs) for
 Availability, response times, notifications of outages
 Data integrity, data privacy, frequency of backup, support and
disaster recovery
Saas Financials (con’t)
 CIO decides if SaaS software will benefit
IT while CFO decides if it is economical for
the whole firm
 Leasing vs Buying
 Similar to decision of leasing or buying a car
 Need to compare costs that effect cash flows such

as depreciation, interest on financing, tax and


opportunity cost
 Use an experience Accountant
Case Study - Software4Rent.biz
 Software4Rent.biz provides casual or long term software application
rental, enterprise wide software deployment and management
 Offerings
 No contracts to sign - rent for as long as you want
 Manage, deploy and track leased software resources more effectively in
real-time.
 No cost software upgrades
 Can 'Top up' at minimal cost in times of peak software use
 Systems administrators can allocate application software to users in real
time
 Change the allocation of licenses as required and reduce the number of
licenses that the company needs to buy.
 Save work to local hard drives, or on their servers if you are a pay by-
the-month user.
 Allow users to rent software on an hourly, daily, weekly or monthly
basis
Software offering & Pricing
Vendor Application Hourly Daily Weekly Monthly Category
Microsoft Office 2003 Professional 1.65 6.60 19.80 49.50 Office Suite
Microsoft Project Professional 2003 3.95 15.80 44.50 97.90 Management
Microsoft Visio Professional 2003 1.95 7.80 23.40 58.50 Drawing
Microsoft Word 2003 0.75 3.00 9.00 22.50 Document
Microsoft Excel 2003 0.75 3.00 9.00 22.50 Accounting
Microsoft PowerPoint 2003 0.75 3.00 9.00 22.50 Presentation
Microsoft Access 2003 0.95 3.80 11.40 28.50 Database
Microsoft Publisher 2003 0.95 3.80 11.40 28.50 Drawing
Microsoft Outlook 2003 0.95 3.80 11.10 28.50 Email
Microsoft InfoPath 2003 0.95 3.80 11.40 28.50 Management
R Project R Statistics Programming 0.35 1.50 4.50 9.95 Statistics

Future shop Microsoft Office Word 2007 $309


Cost Per Usage Chart of MS Word

Low Usage Medium Usage High Usage

Software4Rent $3/day X $9/week X 40weeks = $22.5/month X 16


10 times/mth = $360/year month = $360
$30/mth X
12 mths=
$360/year

Buy $360 inc tax


Conclusion
 Get over initial hurdles
 Adopting SaaS in the enterprise has to be analyzed
for economic and efficiency reasons
 A lot of initial planning and negotiating with the
solution provider- security, data access, legal, etc
 Long term Benefits
 Easy Access
 Reduced piracy of your software
 Lower Cost
 Continuous Technology Enhancements
Questions?

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