Software as a Service

Software as a Service, SaaS for short, is a part of cloud computing. The SaaS model is based on the principle that the software and IT infrastructure to be operated at an external IT service provider and used by the customer as a service. For the use, therefore, a PC with internet access and the Internet connection to the external IT service provider is required. Access to the software is generally realized using a web browser. For the use and operation of the service recipient pays a usage-based (usually per -user, per month) fee. With the SaaS model, the service recipient will be spared the acquisition and operating costs partially. The service provider takes over the complete IT administration and other services such as maintenance and updates. For this purpose, the entire IT infrastructure, including all administrative tasks are outsourced, and the service recipient can concentrate on its core business.

This SaaS models are given more and more importance. The market research firm Gartner predicted a turnover of 12.1 billion U.S. dollars for 2011. This means an increase of 20.7 percent compared to the previous year (2010: $ 10 billion ). The North American market represents the largest urban demand is (2011: $ 7.7 billion ).

• 3.1 From the perspective of the service recipient
• 3.2 From the perspective of the service provider's

Comparison of the traditional software licensing model with Software as a Service

The traditional software licensing model

In the traditional license model provide the IT infrastructure, developing solutions and software dar. together a complex, expensive and risky investment the customer buys the software and thus obtain the license and the right to use the software. The provider provides the customer with an installation package. For the installation of a complete IT infrastructure (hardware, operating system, database, etc. ) is required. After successful installation, the software is configured to meet the business requirements. With the completion of the software implementation, the company takes over the complete operation of the IT infrastructure and related IT tasks.

The license purchase is usually associated with a service contract, which in turn involves incalculable costs. These include installing new releases and for the correction of software errors.

Software as a Service

The basic idea of SaaS is very similar to a power company. The customer obtains its electricity demand over the socket. The customer does not manage its own power generators in the back yard, but the energy supplier assumes the necessary labor for the production of electricity. The customer only uses the stream and get paid for this usage-based fee.

The basic idea described can be equally applied to the SaaS model. The service provider represents the business (eg an ERP system ) or editorial software ( a content management system for technical documentation, for example ) ready in a data center, this operates and provides technical support. He takes all the necessary components of a data center: networks, storage, databases, application servers, Web servers, and disaster recovery and backup services. In addition, other operational services such as authentication, availability, identity management, production control, patch management, activity monitoring, software upgrades and adjustments are made. The service recipient does not install their own software. Exclusively an Internet-capable PC and Internet connection is required to the service provider for the use. Access to the software is implemented via a web browser. For the use and operation of the service recipient pays a usage-based fee.

In essence, the models described above differ in that the IT infrastructure and IT tasks are no longer operated by the service recipient, but by the service provider. The service recipient no longer paid a total software license, but a monthly, usage-based fee. One goal of software as a service is that high investment cost for the IT infrastructure ( eg, hardware, memory, etc.) and IT tasks are saved (eg, software maintenance, updates, etc.).

Pricing models

With software as a service of the service recipient pays a monthly payment for use of the software to the service provider. The monthly rate is dependent on the pricing of the service provider's because the SaaS model offers different pricing models:

In this price model of the service recipient pays a monthly, consistent fee for each logged-in user who works with the software. The user can the software regardless of the number of transactions and the time how to use a " flat rate".

This model is an extension of the first model ( per user / month). This is paid by the service recipient also a monthly, consistent charge. However, this is dependent on the used functions of the software. Consider the example: Does the service recipient the full functionality (such as SRM, CRM, FI / CO, PRO, PM) as the service recipient pays a monthly fee of EUR 133.00 per user. In ten users of the service recipient would pay a total of 1330,00 € per month for the software and IT services. In the event that the service recipient only wants to use the CRM solution, the monthly fee can be reduced. Does the service provider 's CRM solution for example, 50,00 €, so the service recipient for ten users pay a monthly fee of 500,00 Euro.

There is a pricing model that is billed at the per transaction. Herein, for example, the service provider an e -commerce platform that in which the service recipient can sell products. For each generated order in the shop of the service recipient pays a percentage of the sales price.

In this price model, the service provider with a basic version available for free and complements this by paid services.

In addition, there are other pricing models, such as billing amount of data or unused CPU hour or a constant price on a specific contract period. Furthermore, it should be noted that for the service recipient not only the price of the models described above will be billed, but also implementation costs for large software products.

Pros and Cons of Software as a Service

From the perspective of the service recipient

The SaaS model offers small and medium-sized businesses a number of advantages over the traditional license purchase:

• Low risk investment
• Transparent IT costs
• Accelerated implementation
• Reducing the IT process complexity
• Mobility
• Concentration on the core business

The service recipient has a lower investment risk as it does not require any IT hardware for software introduction and paid exclusively for the introduction advice. Two studies by the McKinsey consulting and Yankee Group indicate that the investment costs of a SaaS solution can be reduced compared to an on- premise solution by 30 percent, regardless of the number of users. In addition, the service recipient has a transparent IT costs, because he usually paid only for the actual use of the software. Because SaaS solutions are usually standardized, the configuration and set-up of the application can be implemented quickly and easily to new customers than the traditional license purchase. This allows the implementation of a SaaS solution within a short time can be realized. Another advantage is the outsourcing of process complexity by maintenance, updates and more IT tasks are taken over by the service provider. The software accessed over the Internet ensures high mobility, because the service recipient can be time - and location-independent access to the system. With an outsourced IT infrastructure, companies can focus on their core business or value added, so you can avoid those pesky IT tasks. Thus, IT is an easy-to -use commodity to secure growth, flexibility, competitiveness, and therefore the existence of the company.

• Depending on the service provider
• Slower data transfer speed
• Less customization options
• Less data and transaction security

A disadvantage of software as a service is to be considered that the service recipient the so-called vendor lock -in are in a dependent relationship, because the customer is not the owner of the software. There is a risk that the service provider (eg insolvency) shuts down the system for a reason. The service recipient requires a working Internet connection, otherwise it is impossible to work with SaaS solutions. Another disadvantage is the data transfer speed, which is usually higher for on-premise solutions. The SaaS solutions are usually standardized, so there are few customization of functionality. An important aspect is the data security. There are confidential data from your service provider, so they must be protected with appropriate security measures. Therefore, a SaaS solution is to examine whether these have been tested according to specific safety standards before use. It should SaaS vendors are selected that have been tested and certified by the Federal Office for Security in Information Technology according to the standard for data centers, ISO 27001.

From the perspective of the service provider's

Also for the service provider arising from the SaaS model advantages and disadvantages, which are described below:

• Expansion of the IT portfolio and generate additional revenue
• In the longer term secure income and better liquidity planning option
• Less likelihood of piracy

The service provider has the possibility to extend its IT services and therefore to generate more revenue. Since the service recipient usually pays monthly fees for the use of the software, longer-term revenue can be secured and thus the liquidity will be better planned. In addition, fewer losses are achieved by software piracy, since the software is centrally managed from your service provider.

• Investment risk
• Acceptance problems in the IT market
• Possible damage to reputation and loss of sales

A disadvantage of the SaaS model is the high investment risk, as the acquisition and management of IT infrastructure is guaranteed by the service provider. In addition, the SaaS model is relatively new to the IT market, so currently there are problems with acceptance when the service recipient. The acceptance problems are mostly due to the lack of data security. In the event that the security measures are not adhered to and get sensitive corporate information to external parties, an enormous loss of image with drastic loss of revenue could arise.

Privacy Policy

With SaaS, the customer or employee data from the SaaS customers are no longer on their own computers, but the SaaS provider. Between the customer and the provider of SaaS, a case of order data processing is regularly according to § 11 of the Federal Data Protection Act ( BDSG). The customer is obliged to carefully select the provider to regularly monitor and document the results of inspections. The customer remains responsible for the lawfulness of data processing. Contracts for the provision of SaaS also need to implement the 10 - point checklist of § 11 BDSG, otherwise threaten the customer fines of up to 50,000 euros ( § 43 Section 1 No. 2b BDSG).

SaaS companies

Largest SaaS company is Salesforce.com. Other examples are Taleo (2012 acquired by Oracle for $ 1.2 billion dollars), Paglo (2010 acquired by Citrix) or SuccessFactors (2011 acquired by SAP).